A Study on the Effect of Biases on the Stock Market Investors based on their Gender in Ahmedabad City

Abstract

The stock market is not purely driven by rational decision-making; rather, investor psychology plays a crucial role in shaping market trends and asset prices. This study delves into the various cognitive and emotional biases that influence investor behavior, leading to systematic deviations from classical financial theories like the Efficient Market Hypothesis (EMH). Key biases explored include overconfidence bias, where investors overestimate their knowledge and predictive abilities; loss aversion, which leads to an asymmetrical response to gains and losses; and confirmation bias, where investors seek information that aligns with their preconceived views. Further, this study is focusing on the biases study based on demographic factor gender in Ahmedabad city of Gujarat State in India. For the study, sample size of 200 stock market investors were collected and data was analyzed using ANOVA test, and mean. By integrating insights from psychology, economics, and finance, this study provides a comprehensive understanding of investor biases and their implications for financial markets. The findings can help policymakers, institutional investors, and retail traders develop better investment strategies, risk management frameworks, and regulatory measures to foster market efficiency and stability.