Qualitative Study of Individuals' Behavioral Biases toward Buying Decision of Financial Products: Evidence from Pakistani Stock Market

Abstract

Due to increased complexity of financial instruments, the role of investors' bias in investment decision making has enhanced. To study this role, the present study aims identify the causes of behavioral biases which affect investment decision making. The main parameters of the study are home bias, disposition effect, herding bias, conformation bias and anchoring bias. The research design is exploratory in nature which will help to investigate the causes of behavioral biases that affect the investment decision making of individuals. The qualitative design was employed to get insights by conducting sixteen in-depth semi-structured interviews from individual investors. First and second order codes assigned to data mainly came from literature review. Researchers found that home bias, disposition effect, herding effect was quite evident in Pakistani Investor. However, anchoring bias has been found in half of the participants and confirmation bias not evident in Pakistani investors. The study has various implications for investors and academicians which will help to expand the scope of the future studies and generalizability by addressing the limitation of the current study.