Title: Examining interrelationship amid behavioural biases affecting investment decisions - using DEMATEL approach

Authors: Manika Sharma; Neha Gupta; Mohammad Firoz

Addresses: Amity School of Business, Amity University, Noida, Uttar Pradesh, India ' Amity School of Business, Amity University, Noida, Uttar Pradesh, India ' Department of Business Administration, National Institute of Technology, Kurukshetra, Haryana, India

Abstract: Decision-making in choosing the investment alternative is a tough task. There are several factors that affect the investment decisions. One such factor is the behavioural biases that affect the decision of investor while making the investments. This study aims in studying the cause-and-effect relationship between the various behavioural biases. For this purpose, 11 biases have been identified through the literature review. Then, by using a prepared questionnaire on linguistic scale, data have been collected through 70 portfolio managers and decision-making trial and evaluation laboratory (DEMATEL) technique is used to find the interrelationship between these biases. Identified behavioural biases are also ranked according to the magnitude of influence that affects the investor in the decision-making process. The paper will contribute to the current literature on behavioural finance, and it will also help the portfolio managers to develop a precise strategy whereby they may select a biased free investment avenue and can design a strong portfolio for investors and can save them from making incorrect decisions which result in flawed outcomes.

Keywords: behavioural biases; decision-making; DEMATEL.

DOI: 10.1504/IJOR.2024.137141

International Journal of Operational Research, 2024 Vol.49 No.3, pp.403 - 429

Received: 22 Sep 2020
Accepted: 28 Jun 2021
Published online: 04 Mar 2024 *

Full-text access for editors Full-text access for subscribers Purchase this article Comment on this article