Psychological Triggers of Investment Decision Making

Abstract

This study investigates psychological triggers and behavioral biases shaping investment decisions among Nepalese investors. Employing a descriptive cum causal-comparative design, data from 305 respondents were analyzed using ordinary least squares regression to assess the influence of cognitive and behavioral factors on investment decisions. Findings reveal that emotional intelligence and risk perception are strong positive predictors of investment decisions, while status quo bias and decisional paralysis act as significant behavioral barriers. Cognitive-emotional considerations were found to outweigh rational calculations, with narrative biases reinforcing subjective choices, whereas algorithm aversion and fear of missing out (FOMO) showed no significant effect when controlling for other variables. The study’s reliance on self-reported, cross-sectional data from a purposive sample limits causal inference and generalizability. These results underscore the importance of enhancing emotional intelligence, risk assessment, and behavioral interventions to mitigate biases, offering novel insights into behavioral finance in the Nepalese context.