Influence of Psychological Biases on Investing Choices among Individual Investors in Mangalore City, Karnataka

Abstract

Over the last two decades, there has been a significant uptick in the study of "behavioral finance," which focuses on the psychological effects of financial choices made by individual investors. Such decisions can significantly impact the market, the individual, and the economy. The current research delves into the various psychological elements that influence individuals while investing in the state of Karnataka, specifically in Mangalore. A quantitative study was conducted to analyse the psychology of individual investors in Mangalore City, Karnataka. The data was collected from a sample of 203 investors in Karnataka (Mangalore City) through a structured questionnaire. The study utilized multiple regression analysis using SPSS to determine the relationship between the variables. The study indicates that overconfidence, herding, and regret aversion have a positive effect on investment decisions, while representative bias has a negative effect. However, no relationship was found with mental accounting biases. There is a dearth of research on behavioural finance in the southern part of India. This paper fills the gap by analysing psychological biases in the Indian Individual investor.