The Effect of Self-attribution Bias on Investor's behavior: Mediating Role of Overconfidence Bias in the Capital Market of Iran

Document Type : Original Article

Authors

1 MSc, Faculty of Economics, Management and Social Sciences, Shiraz University, Shiraz, Iran

2 PhD Student, Faculty of Economic Sciences, Lorestan University, Khorram Abad, Iran

Abstract

The rationality of individual investors in the financial markets has been challenged in the last few decades, and a paradigm shift can be witnessed among the investors who are influenced by both rational as well as psychological biases such as self-attribution and overconfidence. The purpose of this study is to investigate the effect of self-attribution bias on investor's behavior with mediating role of overconfidence bias. This research method is a descriptive survey. This study was conducted in investors of Tehran Stock Exchange. The sample comprises Investors, which were selected randomly. Data have been collected by the Mahina et al’s (2018) self-attribution bias questionnaire, the ul Abdin et al’s (2022) overconfidence questionnaire and the Parmitasari et al’s (2018) investor's behavior questionnaire. The validity of the research questionnaires was assessed based on construct validity, diagnostic and convergent validity and its reliability was measured by Cronbach's alpha coefficient. The research model was tested with using Smart PLS software. The results showed that self-attribution bias has effect on overconfidence and investor's behavior. The effect of overconfidence on investor's behavior is significant. Overconfidence mediates the relationship between self-attribution bias and investor's behavior.

Keywords

Journal of International Marketing Modeling
Volume 3, Issue 2
December 2022
Pages 110-122

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