Sabaragamuwa University of Sri Lanka

This paper conceptualizes heuristics identified in behavioural finance in relation to the individual investment decision making. Though modern finance relies on the assumption investors are rational, the counter argument postulates that investors are not always rational. Thus, the decisions are impacted by behavioural heuristics and biases of investor psychology. Heuristic theories identify representativeness, availability, anchoring and emanating overconfidence, enumerate systematic biases in decision making. Therefore, this paper aims to conceptualize the constructs of behavioural heuristics along with individual investor decision making, which will be later employed in a survey study in the Colombo Stock Exchange. This study ascertains heuristics identified in behavioural finance, specifically; representativeness, availability and overconfidence and develop specific definitions for each heuristic through literature. Next, it develops a conceptual model along with the dependent construct, investment decision making. The definitions of each construct are utilized to identify the specific dimensions of each of them, which can be measurable in a stock market. This study provides a comprehensive measurement of the heuristics along with its dimensions and elements using literature in both behavioural and standard finance. This conceptual framework will provide a foundation for future research on investor decision-making of behavioral finance in Sri Lanka.

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dc.contributor.author Wijethungaa, S.
dc.contributor.author Nanayakkarab, N.S.
dc.date.accessioned 2022-03-10T06:26:27Z
dc.date.available 2022-03-10T06:26:27Z
dc.date.issued 2021-12-16
dc.identifier.issn 978-624-5727-18-6
dc.identifier.uri http://repo.lib.sab.ac.lk:8080/xmlui/handle/susl/1812
dc.description.abstract This paper conceptualizes heuristics identified in behavioural finance in relation to the individual investment decision making. Though modern finance relies on the assumption investors are rational, the counter argument postulates that investors are not always rational. Thus, the decisions are impacted by behavioural heuristics and biases of investor psychology. Heuristic theories identify representativeness, availability, anchoring and emanating overconfidence, enumerate systematic biases in decision making. Therefore, this paper aims to conceptualize the constructs of behavioural heuristics along with individual investor decision making, which will be later employed in a survey study in the Colombo Stock Exchange. This study ascertains heuristics identified in behavioural finance, specifically; representativeness, availability and overconfidence and develop specific definitions for each heuristic through literature. Next, it develops a conceptual model along with the dependent construct, investment decision making. The definitions of each construct are utilized to identify the specific dimensions of each of them, which can be measurable in a stock market. This study provides a comprehensive measurement of the heuristics along with its dimensions and elements using literature in both behavioural and standard finance. This conceptual framework will provide a foundation for future research on investor decision-making of behavioral finance in Sri Lanka. en_US
dc.language.iso en en_US
dc.publisher Belihuloya, Faculty of Management Studies, Sabaragamuwa University of Sri Lanka en_US
dc.subject Availability en_US
dc.subject Behavioral finance en_US
dc.subject Investment decision making en_US
dc.subject Behavioral finance en_US
dc.subject Investment decision making en_US
dc.title This paper conceptualizes heuristics identified in behavioural finance in relation to the individual investment decision making. Though modern finance relies on the assumption investors are rational, the counter argument postulates that investors are not always rational. Thus, the decisions are impacted by behavioural heuristics and biases of investor psychology. Heuristic theories identify representativeness, availability, anchoring and emanating overconfidence, enumerate systematic biases in decision making. Therefore, this paper aims to conceptualize the constructs of behavioural heuristics along with individual investor decision making, which will be later employed in a survey study in the Colombo Stock Exchange. This study ascertains heuristics identified in behavioural finance, specifically; representativeness, availability and overconfidence and develop specific definitions for each heuristic through literature. Next, it develops a conceptual model along with the dependent construct, investment decision making. The definitions of each construct are utilized to identify the specific dimensions of each of them, which can be measurable in a stock market. This study provides a comprehensive measurement of the heuristics along with its dimensions and elements using literature in both behavioural and standard finance. This conceptual framework will provide a foundation for future research on investor decision-making of behavioral finance in Sri Lanka. en_US
dc.type Article en_US


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  • ICMR 2021 [133]
    Interdisciplinary Conference of Management Researchers - 2021

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