Testing the Influence of Behavioral Biases Amongst the Students of Business Studies on Their Potential Investment Decision

Abstract

The goal of this study is to examine how behavioral biases influence investors’ financial decisions. Specifically, the study focuses on biases such as overconfidence, anchoring, loss aversion, and the endowment effect. Financial institutions, venture capital firms, investors, and strategists will benefit from this research. After sending out a questionnaire, some firsthand information was gathered. Using correlation and linear regression models, researchers investigate how these biases influence investor decision-making. The study found that all biases, including overconfidence, anchoring, endowment, and loss aversion biases, have a favourable impact on investors' financial decisions. The primary purpose of this study was to investigate how Pakistani business students make financial decisions in the context of their own personal biases. The study's results and recommendations for the investment process will benefit consumers, policymakers, financial advisors, and institutions alike. This study enhances people's decision-making skills by boosting their awareness of biases and how to overcome them, investigating how biases such as loss aversion, anchoring, overconfidence, and the endowment effect influence students' investment decisions in Pakistani business schools. Previous studies have identified a gap in human comprehension, which this study aims to remedy.