Emotional and Cognitive Behaviour biases and Individual Investors investment decision in Islamabad Stock Market

Abstract

Abstract: The objective of this study is to investigate the influence of emotional and cognitive behavioural factors on the investment decisions of individual investors in Islamabad stock market. Data was collected from 150 respondents in Islamabad stock market however the respondents response rate was 80% considered appropriate for data analysis. There are two categories of behavioural biases that affect stock market investment decisions at the Islamabad Stock Exchange: Emotional behavioural factors such as overconfidence, loss aversion, Self-control, and optimism while cognitive-behavioural factors such as anchoring, mental accounting, representativeness, hindsight. The result of the study shown that emotional behavioural biases such as overconfidence, loss aversion, self-control, optimism and cognitive-behavioural biases such as anchoring, mental accounting, representativeness, and hindsight biases have moderating relationship with Indivisual investor investment decision in Islamabad stock exchange. Further the results of the study shows that securities companies may also better for understanding of investors' investment decision and to give better recommendations for future investment scenario.