Relationship between Psychological Factors and Investment Decision Making: The Mediating Role of Risk Perception

Pakistan Journal of Commerce and Social Sciences, 2015, Vol. 9 (3), 968-981

14 Pages Posted: 22 Aug 2018

See all articles by Lubna Riaz

Lubna Riaz

Pir Mehr Ali Shah Arid Agriculture University Rawalpindi (PMAS)

Ahmed Imran Hunjra

University of Waikato; Pir Mehr Ali Shah Arid Agriculture University Rawalpindi (PMAS)

Date Written: 2015

Abstract

The purpose of this study is to examine the role of various psychological factors which affect investment decision of Pakistani investors. A study model has been developed to describe the impact of risk propensity, asymmetric information, and problem framing on investor’s behavior while making decisions through mediating role of risk perception. It also determines how much weight is attached to each independent variable by the investors when they make their decisions. The data for this study has been collected through an adapted questionnaire to determine the relationships between our variables. Structural Equation Modeling has been employed to determine the relationships among the variables. The findings and overall discussion concludes that the investor’s behavior depends on how the available information is being presented to them and how much they are prone to taking risk while making decisions; thus playing a significant role in determining the investment style of an investor.

Keywords: psychological factors, perception of risk, information asymmetry, risk propensity, investment decision making

Suggested Citation

Riaz, Lubna and Hunjra, Ahmed Imran, Relationship between Psychological Factors and Investment Decision Making: The Mediating Role of Risk Perception (2015). Pakistan Journal of Commerce and Social Sciences, 2015, Vol. 9 (3), 968-981. Available at SSRN: https://ssrn.com/abstract=3229723

Lubna Riaz

Pir Mehr Ali Shah Arid Agriculture University Rawalpindi (PMAS) ( email )

Rawalpindi, 44000
Pakistan

Ahmed Imran Hunjra (Contact Author)

University of Waikato ( email )

Te Raupapa
Private Bag 3105
Hamilton, 3240
New Zealand

Pir Mehr Ali Shah Arid Agriculture University Rawalpindi (PMAS) ( email )

Muree Road Rawalpindi
Shamsabad, Punjab 44000
Pakistan
00923457162527 (Phone)

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