Investors Beware: Behavioral Biases Impacting Investment Decisions in Developing Countries
Investors often make decisions based on emotions, cognitive errors, and personal traits, rather than rational thinking. In Pakistan, where the environment is unstable, these biases can affect investment decisions. A study found that investors in stocks and bonds are influenced by biases like confirmation bias, self-control bias, self-attribution bias, and cognitive dissonance bias. It is important for financial advisors to be trained to detect and manage these biases before making investment decisions.