Moderated Mediation: The Impact of Heuristic Representativeness Bias on Investment Decision-Making

Abstract

The purpose of the existing study is to examine the influence of heuristic representativeness bias (HRB) on investment decision-making (IDM) by moderated mediation of external locus of control (ELC) and risk tolerance (RT) in the Pakistan Stock Exchange (PSX). A convenient sampling technique was used for the collection of research data from 385 individual stock investors. Results reveal that RT mediates the association between HRB and IDM. Besides, this study findings also indicate that the association between HRB and IDM is moderated mediated by ELC and RT. Meanwhile, the study outcomes entitlements that ELC reinforces the effect of HRB on investors' risk-taking proclivity that enable them in investment decisions.