Effect of Behavioural Biases on Investment Performance: A Case of The Emerging Economy


  • Tahseen Mohsan Khan
  • Dr. Safia Nosheen
  • Muhammad Usman Islam


Cognitive biases, Emotional biases, fundamental anomalies, technical anomalies.


This study focuses on the equity investors’ base on their educational qualification and experience by using their behavioral cognitive and behavioral emotional biases. Study performing a cluster analysis by using the respond of 317 stocks investors in Pakistan. Descriptive analysis along with SEM is applied as the combination of Confirmatory factor analysis and multiple regressions. The results show that cognitive biases have more impact on investment performance as compared to emotional biases. The path coefficient (standardized beta) has the maximum magnitude for framing biases and this is the only bias that impacts the investment performance through the mediator variable (fundamental anomalies) in cognitive biases. Myopic has mediation impact through fundamental anomalies on investment performance in emotional biases. The study is divided into direct and indirect effects (mediation effect). The study rejoins anomalies existence in Pakistan equity market and most investors having dependence on the fundamental analysis of investment decision making.