A Study of Investor Psychology and Its Effect on Financial Decision Making.

This paper examines how behavioural biases shape Indian retail investment decisions. Classical finance assumes rational markets, but actual investor behavior often reflects psychological influences. We conducted an online survey of 54 Indian retail investors (mostly age 22–25, ~85% students) to probe three biases: overconfidence, herding, and loss aversion. Key findings include that 68.5% of respondents rated themselves as highly confident, and 74.1% reported avoiding investing in falling markets. One‐sample proportion z‐tests show the proportions expressing overconfidence (z≈2.72, p≈0.007) and loss-averse tendencies (z≈3.54, p