The effect of behavioral biases on investment decisions An exploratory study of a sample of investors in the Iraq Stock Exchange

Abstract

This study aims to understand and explain the behavior of decision-makers who participate in the investment decision-making process. In this study, we try to find out whether individual investors are susceptible to some cognitive biases associated with prompts, such as overconfidence, representation, self-attribution, mental accounting biases, and emotional biases. Associated with probability theory, such as loss avoidance, self-control, and the status quo, how these biases affect the decisions of individual investors. The problem of the study is framed in the main question, which is: Is there a relationship between each of the behavioral biases in their dimensions and the investment decision? The data was collected through a questionnaire consisting of (35) questions that were asked to (35) investors in the Iraq Stock Exchange, depending on the descriptive and deductive approach of the sample and the hypotheses of the study using two statistical tools represented in the correlation matrix (Pearson correlation coefficients) to verify the strength of correlations . between the dimensions of the study variables and a simple regression analysis to test the effect relationships between the dimensions of the main study variables. One of the most important conclusions is that there is an effect and correlation of the independent variable on the dependent variable. One of the most important recommendations is that individual investors, when they make investment decisions, must adopt or develop a strategy in advance, and the aim of this strategy is to avoid making decisions under the influence of feelings and tendencies or any other psychological biases, as well as for individuals to compare the decisions they make with the extractive measures that have been developed previously