Abstract

Behavioural finance is one field of study which tries to explain the financial anomalies in relation to individual traits and biases. Overconfidence of investors is a phenomenon when one tends to overestimate the returns and underestimate the risks. The objective of the current research is to study ‘Overconfidence’ and its interaction with other behavioural traits under the influence of demographic variables. The research uses a sample of 186 Indian investors and their 24 behavioural traits and analyses them. Three behavioural traits (Luck; Influence of natural calamities and speculation) were found to be closely correlated with overconfidence. The analysis also uses demographic variables as a moderator of behavioural traits and their relationships. Techniques like regressions and moderating analysis have been used in the research to achieve the objective.

Keywords: Behavioural finance; Overconfidence; Moderation analysis; Investments
DOI: 10.65002/IIJETS.VOL.1.ISSUE.1.001

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