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To study the effect of behavioral biases and gender difference on investment

decision of investor in Ahmedabad City

Article · October 2023

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ISSN: 0378-4568 UGC Care Group-I Journals

To study the effect of behavioral biases and gender difference on investment

decision of investor in Ahmedabad City

Ms. Shivani A Shah

Research scholar, GLS University
Dr. Shefali Dani
Director, Faculty of Business Administration, GLS University

Abstract
The study focus on effect of Behavioral bias and gender difference on investment decision of investor in
City of Ahmedabad City, Many research has shown that investors display behavioral biases while making
stock market judgement and decision, this paper focus more on Examining whether female investor
Comparing male investors counterparts reveals distinct behavioral differences.
The study was conducted in Ahmedabad city by collecting primary data with sample size 85 and data was
collected from male and female investor, Data was analyzed using Independent T-test and study reveals
that eight behavioral biases namely Representativeness bias, Herding Bias, Over confidence bias,
Conservative bias, mood and emotion, familiarity bias, Gambler’s fallacy, Regret Aversion has not
significant difference between the responses of male and female decision making
Keywords: Behavioral finance, Behavioral bias Representativeness bias, Herding Bias, Over confidence
bias, Conservative bias, mood and emotion, familiarity bias, Gambler’s fallacy, Regret Aversion,

Introduction
This research is basically to examine the factor that impact the investor decision in making decision now a
days investor are inclined towards investing in financial services. This research is to analysis the factor like
psychological factor, social factor; behavioral factor etc. affect the investing behavior of the investor
especially the biases decision may affect their investment decision. So, the main aim of the research is to
find out behavior of investor in India as there are many investment alternatives available in the financial
market and investor has to make decision based on what return they expected from their investment and An
investment strategy is prepared by the investor which guide an investor to choose most appropriate
investment which will help to achieve the financial goal of the investor but what factor influence and
motivate the investor to make investment decision is main aim of the research. Different investor have
different characteristic in their life that also influence the investing behavior in making final decision.

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There are investment option available to investor, but investor have to take decision which investment will
yield more return and less risk, liquidity, security of money, tax saving etc. This research will explore that
the behavior of the investor is affected by investment objective or other such criteria and also research will
explore that the behavioral factor such as human psychology, culture of the company, politics in the
company cause the deviate in decision from rational decision.
Behavioral Finance is becoming an essential part of decision making process because it heavily influences
the investor’s performance. Investors may be inclined toward various types of behavioral biases which lead
them to make cognitive error. Behavioral finance look specifically into mood and emotion of the investor
can affect the decision making process.
Behavioral biases
Representativeness- That occurs when people make judgement or decision on the basis of prototype or
stereotype, The investor take decision on the basis of mental representativeness and past price represents
future and this bias can lead to error in judgement
Herding bias- herding bias refers to tendency of an investor to follow the decision and action of other
investor, peer group, etc., rather than relying on own judgment, analysis or information. When the
investment decision of an investor is made out of pressure of other investor ignoring the rationality leads
to herd mentality bias.
Overconfident bias- Overconfident bias is the propensity for a person to overestimate their skills, talents,
judgements, and knowledge. Overconfidence bias makes people more certain of their opinions and
judgements than their objective correctness would indicate. They can think they are more informed, skillful,
or capable which leads to overestimate the accuracy of their investment decision
Conservative bias is a mental processing in which the investor stick to previous information or old
information, investor tend to prefer more conservative investment strategies. Conservative portfolios may
struggle to keep pace with inflation or miss out on opportunities for higher growth.
Emotions and mood- The impact of one's emotional state or mood on judgement and decision-making on
their investment is referred to as emotions and mood bias. These biases happen when people's feelings or
moods influence their perceptions, interpretations, and conclusions regarding the investment which results
in biased or irrational decisions.
Familiarity bias- is people’s frequency to form investment decision based on the information available to
them or investor take decision based on information familiar to them without digging into it. It is cognitive
bias that influences investment decisions based on familiarity with certain investments or companies. It
refers to the tendency of individuals to prefer or feel more comfortable investing in familiar assets or
companies, even if there may be better investment opportunities elsewhere

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Gamble fallacy- is a cognitive bias which occurs when investor believes that the future performance is
influenced by past performance this may leads to wrong decision as investor use past sequential information
and make suboptimal decision of investor
Regret aversion- refers to the tendency of individuals to prefer investment to avoid the possibility of
regretting an investment decision, Regret aversion bias is deep-rooted in the fear of making a decision that
may result in negative consequences. Individuals experiencing this bias tend to focus on the potential regret
they may feel if they make a choice that leads to a negative outcome or negative decision.

Literature review
 (Lokhande & Tupe, 2021)The researcher tries to examine that behavioural bias (Cognitive and
emotional biases) has impact on investor decision, 150 responses were taken from respondent of
Aurangabad city. The main findings of the study was that male investors are more aware than
female investor and investor choose two or more sources for information to get proper investment
decision and study also found that bias has significant impact on investment decision.

 (Metilda & Mishra, 2015) Studied the impact of investment experience, education level, gender on
overconfidence and self-attribution bias for this research 309 responses were collected from mutual
fund investors From Bangalore city the results shows that men or more tend to be overconfident as
compare to women with increase in investment experience and education and there is no significant
difference between self-attribute bias and gender but self-attribution Bias increase with increase in
education and experience of investor and study also found that there is significant association
between overconfidence bias and self-attribution bias.

 (Bashir, Rasheed, Raftar, Fatima, & Maqsood, 2013) look into Behavioural buyers influence the
investment decisions made by students and employee for the study researchers have collected data
from 100 respondents and data was analyzed using chi-square test And correlation, The study found
that there is no significant relation between overconfidence and gender among students and
employee, the study Also found that there is no significant difference between responses of male
and female decision making with regards to overconfidence bias.

 (Chavali & Rosario, 2019)Did research Two no impact of gender difference on investment decision
of investor In Sultanate city in Oman, 200 responses were collected for the purpose of study.
Research was concluded That women are more conservative in nature and take decision based on

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past performance and Focus more on growth where is male are more confident and they focus more
on profitability.

 (Srijanani & Vijaya, 2018 ) Studies to know Gender difference while selecting investment Avenue
and Information source of man and woman are different resulting in a difference in investment
choice, for the study 201 responses were collected from Andhra Pradesh, The results show that it
is taking ability of male and female a different and women prefer risk-free investment yes women
investor tend display less confidence in their investment decision, Study also conclude that
information available regarding investment to male and female are different which have significant
impact on the difference in their investment decision.

 (singh, 2018)Examined the impact of behavioural biases On investment decision of female

investor, In his study they have considered mental accounting, loss aversion, herd mentality,
overconfidence as a variable and Investment avenues such as shares, real estate, gold, silver,
debenture. Data was collected from 345 working women's of Jaipur. The cronbach alpha was
0.734And research shows that all the baises have Significant impact on decision making of female
investor and result also indicate that risk-taking ability of female is not so High.

Research methodology
Nature of Data –

For Primary data collection, structured questionnaire has been designed and collected the response from
the male and female investors who are investing in the stock or mutual fund or both from last four to five
years. 85 sample size have been collected based on convenience sampling from the investors in of
Ahmedabad city. Investors are well known who are having knowledge of trading from last few years.
Secondary data has been collected from research paper, thesis, magazines, Article etc.

Research objective
1) To study difference between gender and behavioral bias (to study if the female investors behave
differently as compare to male investors with respect to the behavioral biases
2) To Study the preference of investment objective by male and female investor
Scope of the study

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My study is regarding the effect of behavioral biases and gender difference on investment decision
of investor in Ahmedabad City
Research type
Descriptive in nature
Data Analysis
Primary data was analyzed using excel and SPSS
Data interpretation and Analysis

Table 1: Classification based on Gender of respondent

Frequency Valid Percent

Male 51 60.0
Valid Female 34 40.0
Total 85 100.0

The gender wise classification of the investor profile of the respondents is given in Table 1 above. The table
shows that the major part of the investor are male i.e. 60% ( 51 respondent) and 40% ( 34 respondent)
respondent are female.
Table 2: Classification based on Gender and Age

Gender Total
Male Female
26- 35 15 12 27
36-45 17 11 28
Age 46- 55 2 3 5
Above 55 5 1 6
Below 25 12 7 19
Total 51 34 85

The gender and age wise classification of the investor profile of the respondents is given in Table 2 above.
The table shows that the major part of the investors is between 36-45 years of age followed by age between
26-35. Among the age group of 36- 45 years, male investors do more investment or equal to female.

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Table 3: Classification based on Gender and Marital Status

Gender Total
Male Female
Married 30 23 53
Marital status
Single 21 11 32
Total 51 34 85

The gender and marital status wise classification of the investor profile of the respondents is given in Table
3 above. The table shows that the major part of the investor are married (53 respondent) and 32 respondent
are unmarried.
Table 4: Classification based on Gender and Education
Gender Total
Male Female
Graduate 14 3 17
Higher Qualification 3 9 12
Education
Post Graduate 31 19 50
Under graduate 3 3 6
Total 51 34 85

The gender and education wise classification of the investor profile of the respondents is given in Table 4
above. The table shows that the major part of the investor are post graduate

Table 5: Where do you invest ?

Gender Total
Male Female
Where do you invest Both 34 21 55
? Equity 7 1 8

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Mutual fund( SIP is

10 12 22
forming part)
Total 51 34 85

The analysis of table 5 shows that both male and female investor prefer to invest in both mutual fund and
equity. The table shows that male prefer to invest more in equity as compare to female and female prefer
to invest more in mutual funds

Table 6: When was the last time you invested in stocks or mutual funds?

Gender Total
Male Female

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More than 2 -5
When was the last time 14 8 22
years
you invested in stocks or
More than 5 years 7 3 10
mutual funds?
Within the 2 years 30 23 53
Total 51 34 85

The table 6 shows that majority of the investor (male or female) have invested in mutual
or equity or both within the 2 years

Table 7: classification of How much total experience do you have with investment ?

Gender Total
Male Female
Less than 1 year 11 11 22

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How much total More than 1 but less than

28 15 43
experience do you have 5 years
with investment? More than 5 years 12 8 20
Total 51 34 85

Table 7 shows the analysis of how much experience investor have in investing, Majority of investor have
experience of More than 1 year but less than 5 years (43 respondent) followed by investor having experience
less than 1 year (22 respondent ) and 20 investor have experience more than 5 years in investing

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Table 8: Classification of Financial objective

Table 8 shows that majority of investor invest to earn return on investment (59 respondents) and 39 male
and female invest to save tax, 21 and 16 respondents invest to minimize the risk and to diversify the portfolio
respectively.
Table 9: While taking investment decision you are influenced by?

Table 9 shows majority of investment decision is influenced by financial analysts and stock analysts,
followed by major influence by friends/ relative /co-worker by both male and female investor.

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Representativeness bias
Hypothesis 1:-
H0: There is no significant difference in Representativeness bias and Gender difference
H1: There is significant difference in Representativeness bias and Gender difference
Table 10: Representativeness Bias

For Representative bias, there was no significant difference for male (M= 3.26, SD=0.791) and for female
( M= 3.26, SD=0.774) so the magnitude of difference in mean difference between male and female is very
small i.e.( mean difference= 0.0039; 95% CL= -0.341 to 0.349)
Table: 10.1

Interpretation: representativeness bias is measured in the research based on a Likert scale between
Strongly Disagree (1) and Strongly Agree (5) using the statement, To determine if a difference is
statistically significant, an independent sample t-test was used. The table number 10.1 represents the
independent t-test statistics for variable gender and Representativeness bias factors, Levene’s test statistics
for given factor, the probability values are greater than 0.05, so study fail to reject the null hypothesis
Further study of independent sample t-test result in table 10.1 (t, 0.023, p-value, 0.982) so we again fail to
reject the null hypothesis and interpret that there is no significant difference between male and female
regarding Representativeness bias.

Herding bias
H0: There is no significant difference in Representativeness bias and Gender difference
H1: There is significant difference in herding bias and Gender difference
Table 11: Herding bias

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For Herding bias, there was no significant difference for male (M= 3.13 SD=0.906) and for female ( M=
2.82, SD=0.832) so the magnitude of difference in mean difference between male and female is small i.e.(
mean difference= 0.309 ; 95% CL= -0.077 to 0.69)
Table 11.1

Interpretation:- To determine if a difference is statistically significant, an independent sample t-test was

used. The table number 11.1 represents the independent t-test statistics for variable gender and Herding bias
factors, Levene’s test statistics for given factor, the probability values is greater than 0.05, so study fail to
reject the null hypothesis
Further study of independent sample t-test result in table 11.1 (t, 1.6 , p-value, 0.11 ) so we again fail to
reject the null hypothesis and interpret that there is no significant difference between male and female
regarding Herding bias.
Overconfident bias
H0: There is no significant difference in Overconfidence bias and Gender difference
H1: There is significant difference in Overconfidence bias and Gender difference
Table 12: Overconfident bias

For Overconfident bias, there was no significant difference for male (M= 3.42, SD=0.648) and for female
( M= 3.11, SD=0.857) so the magnitude of difference in mean difference between male and female with
mean difference= 0.315; 95% CL= -0.01 to 0.64
Table 12.1

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Interpretation:- To determine if a difference is statistically significant, an independent sample t-test was

used. The table number 11.1 represents the independent t-test statistics for variable gender and
Overconfident bias factors, (t, 1.9; p value= 0.06), So we accept the null hypothesis that there is no
significant difference in investment choice between male and female with regards to Overconfidence bias

Conservative bias
H0: There is no significant difference in Conservative bias and Gender difference
H1: There is significant difference in Conservative bias and Gender difference
Table 13: Conservative bias

For Conservative bias, there was no significant difference for male (M= 3.15, SD=0.669) and for female (
M= 3.15, SD=0.782) so the magnitude of difference in mean difference between male and female is 0.002;
95% CL= -0.32 to 0.31)
Table 13.1

Interpretation:- To determine if a difference is statistically significant, an independent sample t-test was

used. The table number 12.1 represents the independent t-test statistics for variable gender and Conservative
bias factors, (t, -0.15; p value= 0.988), So the null hypothesis is accepted that there is no significant
difference in investment choice between male and female with regards to Conservative bias

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Emotion and mood

H0: There is no significant difference in Mood and emotion and Gender difference
H1: There is significant difference in Mood and emotion and Gender difference
Table 13: Emotion and Mood

For Emotion and Mood, there was no significant difference for male (M= 3.00, SD=0.816) and for female
( M= 2.82, SD=0.762) so the magnitude of difference in mean difference between male and female is
0.1887; 95% CL= -0.16 to 0.31)

Interpretation:- To determine if a difference is statistically significant, an independent sample t-test was

used. The table number 12.1 represents the independent t-test statistics for variable gender and Emotion
and mood factors, (t, 1.07; p value= 0.28), So we reject alternative hypothesis and the null hypothesis is
accepted that there is no significant difference in investment choice between gender and Emotion and mood

Familiarity bias
H0: There is no significant difference in Familiarity and Gender difference
H1: There is significant difference in Familiarity and Gender difference
Table 14: Familiarity bias

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For Familiarity bias, there was no significant difference for male (M= 3.34, SD=0.695) and for female (
M= 3.27, SD=0.762) so the magnitude of difference in mean difference between male and female is 0.0637
; 95% CL= -0.254 to 0.38)
Table 14.1

Interpretation: - To determine if a difference is statistically significant, an independent sample t-test was

used. The table number 14.1 represents the independent t-test statistics for variable gender and Familiarity
bias, (t, 0.398; p value= 0.69), So H1 is rejected and the null hypothesis i.e. H0 is accepted that there is no
significant difference in investment choice between gender and Familiarity bias

Gamble fallacy
H0: There is no significant difference in Gamble fallacy and Gender difference
H1: There is significant difference in Gamble Fallacy and Gender difference
Table 15:- Gamble Fallacy

For Gamble Fallacy, there was no significant difference for male (M= 2.95, SD=0.773) and for female (
M= 2.80, SD=0.942) so the magnitude of difference in mean difference between male and female is 0.153
; 95% CL= -0.218 to 0.525)

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Table 15.1

Interpretation: - To determine if a difference is statistically significant, an independent sample t-test was

used. The table number 15.1 represents the independent t-test statistics for variable gender and Gamble
Fallacy, (t, 0.822; p value= 0.41), So H1 is rejected and the null hypothesis i.e. H0 is accepted that there is
no significant difference in investment choice between gender and Gamble Fallacy

Regret aversion
H0: There is no significant difference in Regret Aversion and Gender difference
H1: There is significant difference in Regret aversion and Gender difference
Table 16: Regret Aversion

For Regret Aversion, there was no significant difference for male (M= 2.86, SD=0.671) and for female (
M= 3.000, SD=0.691) so the magnitude of difference in mean difference between male and female is -0.137
; 95% CL= -0.436 to 0.161)

Table 16.1

Interpretation: - To determine if a difference is statistically significant, an independent sample t-test was

used. The table number 16.1 represents the independent t-test statistics for variable gender and Regret

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Aversion, (t, -0.91; p value= 0.36), So the null hypothesis i.e. H0 is accepted that there is no significant
difference in investment choice between gender and Regret Aversion

Conclusion
The aim of the study is to investigate whether the female investors behave differently as compare to male
investors with respect to eight cognitive behavioral biases namely Representativeness bias, Herding Bias,
Over confidence bias, Conservative bias, mood and emotion, familiarity bias, Gambler’s fallacy, Regret
Aversion and this Study also check the preference of investment objective by male and female investor,
The study was conducted in Ahmedabad City, Gujarat, Various hypothesis were created and primary study
was carried on by Collecting 85 responses from male and female investor who are investing in
equity or mutual fund or both, The eight biases were measured on likert scale, and data was analyzed using
independent T-test to study the significant difference between gender and behavioral bias. This study
concludes there is no significant difference between the responses of male and female decision making with
regards to Representativeness bias, Herding Bias, Over confidence bias, Conservative bias, mood and
emotion, familiarity bias, Gambler’s fallacy, Regret Aversion and that majority of investor invest to earn
return on investment (59 respondents) and 39 male and female invest to save tax, 21 and 16 respondents
invest to minimize the risk and to diversify the portfolio respectively.

Bibliography
Bashir, T., Rasheed, U., Raftar, S., Fatima, S., & Maqsood, M. (2013). “Impact of Behavioral Biases on
Investors Decision Making: Male vs Female". Journal of Business and Management, 10(3), 60-
68.
Chavali, K., & Rosario, S. (2019). Influence of Gender on investment decisions of Investors in Sultanate
of Oman. Global Journal of Economics and Business, 7(2), 234-242.
doi:10.31559/GJEB2019.7.2.7
Lokhande, M. A., & Tupe, V. (2021, Februrary ). A STUDY OF IMPACT OF BEHAVIOURAL
BIASES ON INVESTOR’S INVESTMENT DECISION. International Research Journal of
Modernization in Engineering Technology and Science, 3(2). Retrieved from
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.pdf

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Metilda, M. J., & Mishra, K. (2015). A study on the impact of investment experience, gender, and level of
education on overconfidence and self-attribution bias. IIMB Management Review, 228–239.
singh, A. (2018, August). IMPACT OF BEHAVIOURAL BIASES ON INVESTMENT DECISIONS OF
FEMALE DECISION. International Journal of Research and Analytical Reviews, 5(3), 6.
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Srijanani, & Vijaya. (2018 ). A study on impact of gender in investment decisions. Journal of
Management Research and Analysis, 5(2), 161-165. doi: 10.18231/2394-2770.2018.0025

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