How does Social Interaction affect the Individual Investor’s Investment Decision?

Abstract

Behavioral finance has long questioned conventional finance's presupposition of rationality. Most of the non-financial aspects, such as human personality traits and the social environment in which decisions are formed, have recently emerged. This study investigates the impact of specific behavioral biases on investment decision-making. A questionnaire was distributed to a representative sample (n=475) of stock exchange investors to collect data. In this study, descriptive statistics, correlation, and regression were used as analysis methodologies. Individual investors' judgments are influenced by behavioral biases, according to the findings. The research supported including social interaction in investment decisions in theory. The findings demonstrate that investors are becoming more aware of their emotional effects while also improving their self-control and investing analysis skills. Further research can be conducted using psychological bias and other accounting data indicators such as Earnings per Share (EPS) to examine social interaction behavior in investment decision-making, as well as investor prejudices.