Do behavioral biases in gender differences affect investment decisions?

Abstract

The purpose of this study is to investigate that whether the gender can affect the investment decision making by considering the effect of two behavioral biases i.e. risk aversion and over confidence? This study is conducted on Investors of National Saving Center (NSC), residents of Karachi, Hyderabad and Sukkur Regions. The questionnaire based survey was used as a tool to collect the data using convenient sampling technique. The sample size consisted of 391 investors comprising of 217 male and 174 female. The Chi- square test was used to analyze the data and to find out the significant association of the gender differences of the investors in the context of risk aversion and overconfidence biases. The findings of this study regarding the risk aversion show that, when compared with male, the female are more conservative in making the financial decisions while male are more risk takers than female. The results of gender differences based on overconfidence are seems to be mixed. The one conclusion can’t be drawn on the basis of the results found from the questions of overconfidence and no any significant association was found between gender and overconfidence. This study also found that besides the gender differences in risk aversion and overconfidence, fewer investors prefer to invest in the financial market.