EFFECT OF BEHAVIORAL BIASES ON INVESTMENT DECISIONS WITH MODERATING EFFECT OF LOCUS OF CONTROL: AN EMPIRICAL STUDY ON PAKISTANI INVESTORS

Abstract

The link between behavioral biases, locus of control, and investment decision making in Pakistan is examined in this study. In this study, the independent variables are self-attribution, overconfidence, and over optimism, while the moderating variable is locus of control, and the dependent variable is investment decision making. However, the target group for the investigation on the correlation between the aforementioned factors is investors of Pakistan. The primary data was gathered using an adopted structured questionnaire with a five-point Likert scale, which is a quantitative research approach. Through the convenience sample approach, 180 respondents (Pakistani investors) provided their replies. Using SPSS software, statistical tests including correlation, regression, and moderation analysis are performed on the recorded responses. The findings show that Pakistani investors’ decision making is significantly impacted by self-attribution, overconfidence, and over optimism. The association between self-attribution, overconfidence, and over optimism (independent variables) and investment decision making (dependent variable) in Pakistan is, however, strongly moderated by locus of control, according to moderation analysis.