Volume : 4, Issue : 7, July - 2015

Interaction between Demographic Variable and Behaviour Bias of Mutual Fund Investors

Dr. Chetna Makwana

Abstract :

<p>Traditionally, economics and finance have focused on models that assume rationality. However, behavioural bias influences financial decision makers such that they act seemingly in irrational manner, and make suboptimal decision, violate traditional finance claim of rationality. This research study is an attempt to explain how the Heuristics, Bias, and psychological dimensions influence investment decisions of individual investor, how perception influences the mutual funds market as a whole. It is worth exploring whether field of psychology- heuristics and bias helps investor to make more reasonable investment decisions. It is found that there is relationship between perception and overconfidence, mental accounting, familiarity and mental accounting. Thus, it can be concluded that out of six variable (bias) under study there is correlation between four variable with perception viz. Overconfidence, mental accounting, Representativeness in information processing and familiarity bias. It is also observed that age group of investor is most prominent factors among other demographic factors which affect the overconfidence of investors. It can be summed up that there is variation in behavioural biases due to demographic factors viz. Age, Income, Education, while Gender is not showing any evidence of effect. Similarly, awareness is not influencing on behavioural bias but perception if significantly influencing behavioural bias of mutual fund investors.</p>