Abstract
The present study uses a quantitative research approach to explore the impact of behavioural biases and personality on investment decisions and risk perception. It analyses how biases such as Anchoring, Disposition, Representativeness, and herding influence people’s risk perception and investment behaviour. The research also investigates the moderating effect of personality traits on risk perception and investment decision-making. The findings show that behavioural biases significantly influence risk perception amplification, except for the overconfidence bias, which has no statistically significant influence. Moreover, risk perception also appears to be the key determinant of investment choice, indicating its vital role in the context of the financial decision-making process. The study also corroborates that personality traits act as moderating variables, influencing how individuals perceive and react to perceived risks. Individuals with higher levels of extraversion, Agreeableness, Conscientiousness, and Openness to experience tend to steer their investment choices based on risk perceptions. These findings are important to investors, financial planners, and policymakers because they illuminate the cognitive and personality-based processes that guide investment behaviour. Greater insight into these psychological processes can assist in catalysing the formation of customised financial strategies that minimise the negative impact of biases, encourage informed decision-making, and ultimately enhance overall economic well-being. The study also contributes to the larger body of behavioural finance research by shedding light on the dynamic interplay among cognitive bias, personality, and investment behaviour.
Keywords: Behavioural Biases, Investment Decisions, Personality Traits, Risk Perception.