Risk Attitudes and Cognitive Bias: A Study of Individuals’ Financial Behaviour

Cognitive bias impairs an individual’s financial decision-making. Investors can make less biased and rational financial decisions by addressing and understanding cognitive bias. Many cognitive biases, i.e., overconfidence, loss aversion, confirmation bias, availability heuristics, anchoring bias, etc., may depend on demographic and socio-economic factors. On the other hand, individuals’ risk attitudes can also distort financial decision-making, such as loss aversion, even when gains and losses are of equal magnitude. This paper intends to examine the risk attitude of the respondents and behavioural bias through primary data analysis. We have examined the risk attitude and behavioural biases of the selected respondents. . A “proportional test”, a Pearsonian chi-squared test, and Yates correction were used for data analysis. Herd behaviour is prominent among the younger generation, who has comparatively less economic obligations than the older populace.