Smartphone Addiction- A Disease in the Stock Market Driving Herding and Overconfidence – A PLS - SEM Analysis

Abstract

This article examines the smartphone-loved human behavior and the development of psychological biases leading to irrational investment decision-making. We use a survey among a sample of 95 equity investors in the Colombo Stock Exchange and analyze the results using the Partial Least Squares- Structural Equation Modelling approach. We confirm the existence of herd behavior and overconfidence bias which are triggered by smartphone addiction. Investment decisions are strongly influenced by overconfidence while overconfident investors show an ability to mediate the influence of herding. The findings indicate the risk of smartphone and social media addiction, a silent disease driving mispricing in equity markets.   Key words: Overconfidence, Herd behavior, Social Media Addiction, Investment Decision