Understanding Individual Investment Decisions Through Behavioral Biases: Evidence from Morocco

Abstract Investment decisions involve a series of choices that can significantly affect the performance of financial investments. Traditional financial theory generally assumes that individuals make decisions through rational analysis, whereas behavioral finance emphasizes the influence of psychological mechanisms and cognitive biases on investors’ choices. Against this background, the present study examines the behavioral determinants of investment decision-making among individual investors operating in the Moroccan stock market. Empirical data were collected through a questionnaire-based survey administered directly to randomly selected retail investors. Of the 300 questionnaires distributed, 112 were fully completed and retained for analysis. The research adopts a positivist epistemological approach and relies on exploratory factor analysis (EFA) and confirmatory factor analysis (CFA) to examine the collected data. The findings reveal five underlying behavioral dimensions associated with individual investors’ investment decisions. These results contribute to a better understanding of the psychological and behavioral mechanisms underlying investment choices and may help financial institutions develop investment products and services that more closely reflect the preferences and needs of individual investors. Keywords: Retail investors; equity markets; behavioral biases; investment decisions; behavioral finance.