Psychological Biases and Investment Decisions: A Deep Dive into the Chinese Market

Abstract

This study investigates the intricate relationship between investor self-confidence, risk perception, decision-making biases, cognitive biases, and investment experience in influencing individuals' investment portfolio choices. Recognizing the significance of these variables in the financial decision-making process, our research aims to shed light on the nuanced dynamics that contribute to the formation of investment portfolios.This article analyses, using quantitative methods, data collected from a diverse sample of local Chinese investors. Self-confidence of investors was assessed to understand its impact on risk perception and decision-making bias. In addition, this article examines how accumulated investment experience moderates these relationships.The dependent variable of portfolio is the focus of our analysis. Through rigorous statistical techniques, we aim to uncover patterns and correlations that provide insights into the factors that influence portfolio composition. The results of this study are expected to contribute to the existing body of knowledge in finance and behavioral economics, providing practical implications for individual investors and financial professionals.The study aims to enhance the understanding of the psychological and empirical dimensions underlying portfolio choice, thereby providing valuable insights for investors to optimize their financial decision-making process in a dynamic market environment.