Studying the effect of perceptual errors on the decisions made by the investors by effectiveness of information in Tehran Stock Exchange Company

Abstract

There are many latent factors that are effective on the decisions made by the investors. The factors that the investors are not aware of their effectiveness and make investment decisions. The main purpose of the present research is to study the perceptual factors affecting on the decision making process of the investors and the effect of information on these factors. For this aim, 385 investors of Tehran Stock Exchange Company were selected as a sample through random sampling method and the required data were gathered via the questionnaire. The accuracy of the hypothesizes was tested via a structural equation model. The results obtained from the present study show that the decision making process of the investors is affected by the representative error, overconfidence error and mood state error by 19%. Moreover, overconfidence error is affected by the degree of information by 95% and by the anonymity of the information by 10%. The mood state error is effective on information processing time by 13% and the information processing time is effective on decision making process by 24%.

Keywords: Behavioral Finance, Perceptual Error, Decision making, Investment