The Influence of Psychological Biases on Investor Risk-Taking Behaviour:Insights from a Behavioral Finance Survey

Sreyasi Bandyopadhyay

The Influence of Psychological Biases on Investor Risk-Taking Behaviour:Insights from a Behavioral Finance Survey

Author(s)	Sreyasi Bandyopadhyay
Country	India
Abstract	Investment decisions which are thought to be rational are now generally known to be influenced by psychological and emotional factors, and behavioural finance is now an important structure by which the actual investor behaviour is described. The current study is based on this point of view and intends to research the effect of psychological biases on the risk taking of investors, particularly the loss aversion and the larger effect of the cognitive biases, but the effect of demographic factors is also taken into account. The main research questions are to test the impact of loss aversion on the readiness of investors to invest in highrisk assets and to test the correlation between psychological biases and the readiness to take risks in general. The mixed research design was followed with descriptive and exploratory design and the data was gathered through structured questionnaires and interview schedules of 150 active individual investors in urban India relying on the secondary sources. Mean, standard deviation, correlation and regression are the statistical tools that were used in MS Excel and SPSS. The results indicate that loss aversion has a statistically significant but weak negative correlation with willingness to invest in high-risk assets, which suggests that the higher the loss aversion, the less the high-risk investment preferences. Likewise, psychological biases were also observed to be significantly negatively related with the risk taking behavior of the investors. The authors conclude that psychological biases are essential in disciplining the decision of the investor and tend to deter people against investing in risky ventures. These lessons help to recognize the role of behavioral awareness in the decision-making of financial issues and emphasize the necessity of interventions in financial liter
Keywords	Behavioral Finance, Psychological Biases, Loss Aversion, Risk-Taking Behavior, Investor Decision-Making
Field	Sociology > Banking / Finance
Published In	Volume 8, Issue 1, January-February 2026
Published On	2026-02-13

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The Influence of Psychological Biases on Investor Risk-Taking Behaviour:Insights from a Behavioral Finance Survey

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