Cognitive Biases and Investment Choices: Exploring the Psychological Determinants of Financial Decision-Making in Thailand

Abstract

This study delves into the psychological biases that significantly influence investment preferences and decisions. The primary objective is to dissect and understand the particular psychological factors that sway individual investment choices. Further, it examines the roles of risk perception and financial literacy in shaping these investment decisions. By identifying and understanding these psychological influences, the research aims to equip financial advisors with the necessary insights to enhance client service by addressing these biases effectively. Additionally, it seeks to empower individual investors with the knowledge to recognize and counteract these biases, thereby fostering more informed and rational investment decisions. To achieve these goals, data were gathered through a convenience sampling method using a detailed survey designed to capture the nuances of investor behavior and the underlying psychological factors. The study employed robust statistical tools, including regression analysis and correlation techniques, to analyze the theoretical constructs and their interrelationships. The study also substantiated the significant roles that financial literacy and risk perception play in shaping these decisions. These factors are crucial in determining how investors process information and make financial choices, emphasizing the importance of education and informed risk assessment in investment strategies. One noted limitation of this research is its concentration on only three specific biases, while numerous other psychological biases exist that could also profoundly affect investment decisions. Future research could expand on this foundation by exploring additional biases and their impacts, potentially offering a more comprehensive view of the psychological landscape that investors navigate.