Heuristic Biases Effect On Individual Investor's Decicions: Case In Vnx

Abstract

This study aims to clarify the role of heuristics in the active trading on the Vietnam Stock Market and how they affect individual investors' investment decisions (VNX). Few research have focused on investor behaviour in less developed financial markets; most studies have focused on well established financial markets or nascent economies. The current work helps to close this gap in the literature. A survey, encompassing a variety of factors such as indicators for speculators and decisions related to investments, was applied to assess the heuristic biases of investors. The method of quantitative was utilized, garnering 205 valid responses from participants. An intentional and practical sampling technique was implemented to collect the data. To scrutinize the association between investment choices and heuristic biases, hypotheses were investigated through correlation and regression analyses. The study furnishes empirical evidence demonstrating the correlation between heuristic biases and investment decisions. The findings reveal that the significant adverse influence on investment choices made by individual traders on the VNX is attributed to heuristic biases (overconfidence, representativeness, availability, and anchoring). The tiny sample size is the main flaw in the empirical review. More samples would have allowed for a wider range of investigation and more dependable results.