Archives of Current Research International

Behavioral finance emphasizes the role of psychological factors in influencing investor decision-making, challenging the assumptions of rational behavior proposed by traditional financial theories. Investors are often affected by multiple cognitive and emotional biases that jointly shape their investment choices. This study aims to examine the collective and incremental impact of behavioral biases on investment decision-making using a step-wise multiple regression approach. The study considers thirteen behavioral biases, including herding bias, self-attribution bias, cognitive aversion bias, anchoring bias, regret aversion bias, overconfidence bias, conservation bias, loss aversion bias, representative bias, availability bias, mental accounting bias, status quo bias, and hindsight bias. Primary data were collected from individual investors, and step-wise regression analysis was employed to identify the relative contribution of each behavioral bias in explaining variations in investment decision-making. The results of the regression ANOVA indicate that all thirteen models are statistically significant at the 0.001 level. The explanatory power of the models increases progressively with the inclusion of additional behavioral variables, with the twelfth model exhibiting the highest F-value, indicating strong model fitness. The findings reveal that herding bias, self-attribution bias, regret aversion bias, loss aversion bias, and anchoring bias consistently exert a significant and positive influence on investment decisions across multiple models. The standardized beta coefficients demonstrate that no single bias operates in isolation; rather, investment behavior is shaped by the combined influence of several behavioral factors. All predictors included in the final models show statistically significant t-values at the 0.001 level, confirming their relevance in explaining investor behavior. The study contributes to the behavioral finance literature by providing empirical evidence on the cumulative impact of multiple behavioral biases and highlighting the importance of psychological factors in investment decision-making. The findings offer practical insights for investors, financial advisors, and policymakers in designing strategies to mitigate biased decision-making and promote more informed investment behavior.