The Impact of Cognitive Biases on The Investment Decision of Individual Investors: The Role of Risk Propensity


  • Wajahat Hussain UET Taxila, Islamabad
  • Madiha Ashiq UET Taxila, Islamabad
  • Muneeb Ullah Qazi UET Taxila, Islamabad
  • Mohsin Ali Universiti Utara Malaysia (UUM), Malaysia



Overconfidence, Representative, Availability, Anchoring, Risk Propensity, Investment Decision


This study investigates the impact of cognitive biases on individual investors' investment decisions using the mediation role of risk propensity. Data was collected from 320 investors with a minimum of one year of experience and over a 90-day time frame. A self-administered questionnaire was used, and statistical analysis was performed using smart PLS and SPSS. The results showed that cognitive biases have a positive impact on individual investment decisions, with an indirect effect supporting the meditation model between cognitive biases and investment decisions. The indirect effect of risk propensity also positively influences cognitive biases and investment decisions. This study contributes to the mediating role of risk propensity and validates it from an individual perspective, allowing for better understanding of the relationship between cognitive biases and investment decisions. The outcomes and implications of this research are relevant for behavioral finance-related research and can help individual investors, financial institutions, and governments better understand the role of investors' behavior in the stock market.


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How to Cite

Hussain, W., Ashiq , M., Qazi , M. U., & Ali , M. (2023). The Impact of Cognitive Biases on The Investment Decision of Individual Investors: The Role of Risk Propensity. Journal of Financial Technologies (Fintech), Inclusion and Sustainability, 2(1), 47–72.