Title: Fundamental anomalies as a mediator in the relationship between heuristics and investment decisions

Authors: N.V. Suresh; G. Manoj; M. Daniel Rajkumar; Balaji Kanagasabai

Addresses: ASET College of Science and Technology, Chennai, Tamil Nadu, India ' Vel Tech Rangarajan Dr. Sagunthala R&D Institute of Science and Technology, Chennai, Tamil Nadu, India ' SRM Institute of Science and Technology, Chennai, Tamil Nadu, India ' University of Madras, Chennai, Tamil Nadu, India

Abstract: Research works in the cognitive biases domain led to the birth of heuristics & biases' approach in the late 1970s by developing theoretical approaches to comprehend the constraints of human judgement. This research paper is developed with a notion of understanding the relationship between heuristics, irrational decisions of investors and the mediating role of fundamental anomalies. Majority of the studies, in the area of behavioural finance examine the direct relationship between heuristics, investment decisions and performance but this study is first of its kind which explores the relationship with the mediating effects of fundamental anomalies. Data are collected from investors from Chennai by adopting a multi-stage sampling method using a structured questionnaire. The results indicate that all the heuristics dealt in this study have a significant and positive relationship with irrational decision making and fundamental anomalies partially mediate the relationship between all the heuristics and irrational decision making.

Keywords: heuristics; fundamental anomalies; irrational decision making.

DOI: 10.1504/IJAMS.2024.142369

International Journal of Applied Management Science, 2024 Vol.16 No.4, pp.383 - 396

Received: 10 Sep 2023
Accepted: 04 Feb 2024
Published online: 25 Oct 2024 *

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