Effect of Anchoring Bias on Risky Investment Decision. Evidence from Pakistan Equity Market

Abstract

Study of behavioral finance shows the impact of psychology on the performance and abilities of investors and it is important to study because it shows the main factors behind market inadequacy. Investor’s decisions are reflected by the cognitive errors, feelings and emotions and these behavioral actions urge an investor to take decision. The aim of this paper is to check that if investors take their decisions on the basis of their prior piece of knowledge than how the behavior or decisions of an investor reflect. For this purpose primary data is used to collect the respond of an investor. This study is conducted in Karachi Stock Exchange, Islamabad Stock Exchange and Lahore Stock Exchange.