Individual Investors and Domestic Stock Preferences: The Effects of Availability Bias, Ambiguity Aversion, and Regret Aversion at the Dar es Salaam Stock Exchange, Tanzania

The aim of this paper was to examine how psychological biases shape domestic stock preferences of individual investors engaging in stock trading at the Dar es Salaam Stock Exchange. Cross-sectional survey research was employed to achieve the overall aim of the study. This study was informed by key behavioural finance theories. The empirical data concerning the behavioural constructs were collected from investors owning shares of the companies trading at the DSE. Using convenience and snowball sampling methods and a combination of physical and web-based techniques, a self-administered questionnaire, the researcher distributed more than 1,800 questionnaires. A final sample used for analyses consisted of 280 usable questionnaires. Furthermore, multiple regression analysis was used to examine the influence of the key variables under investigation. Overall, the findings of the study strongly support the hypotheses, demonstrating that availability bias, ambiguity aversion, and regret aversion each significantly contribute to DSP. The study concludes that recency bias and advocate recommendations drive investors toward domestic stocks, while the need for adequate information reinforces these results. Furthermore, fear of regret plays an important role in discouraging investors from diversifying into foreign stocks. Finally, the study recommends that financial literacy education, transparency, and behavioural interventions can help to counteract these cognitive biases and achieve more balanced investment strategies.