Investigating the Investors Decision Making Process; Empirical Evidence from Pakistan Stock Exchange

Abstract

This study examines the influence of individual characteristics (age, gender, experience, education) on the investor’s investment decisions through herding effects (cognitive conflict, home bias, conformity, follow other actions) as mediator variables in the Pakistan stock exchange. Only scant research emphases on behavioral finance in Pakistan. Individual investors who invest directly in stock exchange are of great value to Pakistan economy and stock exchange as the mutual fund industry is on infant level and is small in investing as compare to direct investors. This study examines understand how demographics influence herding behavior and its further impact on investment decisions, it is important to understand the origin of herding effects. This study will provide relevant literature in order to develop conceptual understanding for the underlying mechanism and will also provide details about herding effects.