Effect of Cognitive Biases on Investment Strategies

Abstract

Previously the ideas were that the investment decision is logical and infected only in the financial market fluctuations. But these old ideas seem to be incorrect. So, this study aimed to measure the relation between the behavioral bias and the strategical tendency of the investors in the Iraqi banks that working in the private sector. This study was based on the statistical analysis and a questionnaire list was made as per Likert scale and the SPSS program was used for analysis the data. It was found that the investment decisions are affected by behavioral bias and there is a significant relation between these behavioral bias and investment strategy. Also, it was found that, there is a huge impact for behavioral bias and investment strategy in understanding the investors' decisions in financial market. Finally, it is recommended for the Iraqi financial market to educate the investors to understand the psychological effecting factors to minimize the risk in decision making. And that can be achieved by training courses and session to explain the financial concepts that are closely related to investment