Behavioral Biases in Equity Investment A Study on Bank Employees in Tripura

Abstract

newline Behavioral biases refer to systematic patterns of deviation from rational judgment or objective standards, often driven by psychological influences. In the context of equity investment, these biases can lead investors to make decisions that are not always based on sound financial logic or available data. Common behavioral biases include overconfidence, herd behavior, loss aversion, anchoring, and confirmation bias. These biases can significantly affect investment outcomes by causing misjudgment of risk, mispricing of assets, and below par portfolio choices. Understanding behavioral biases is crucial in equity investment, as they help explain why markets may not always behave efficiently and why investors may deviate from rational logical behavior. Recognizing and mitigating these biases can lead to more informed and disciplined investment decisions, ultimately improving financial performance. newlineBank employees are selected as the focus of this study because they represent a financially literate segment of the population that is actively engaged in financial services and investment-related activities. Their professional background implies a certain level of exposure to financial products, market dynamics, and investment decision-making processes making them a relevant group for analyzing how behavioral biases manifest even among trained individuals. Studying bank employees helps to understand whether financial knowledge and experience reduce or reinforce behavioral biases. Moreover, in regions like Tripura, where academic research on behavioral finance is limited, analyzing the investment behavior of bank employees provides valuable insights into how local professionals make financial decisions in a unique economic and cultural context. This, in turn, contributes to the broader understanding of behavioral finance in less-studied regions of India. newlineTo collect data required for the necessary statistical test all the population of Bank Employees were collected and listed down and assigned serial numbers. Sa