Moderated Mediation: The Impact of Heuristic Representativeness Bias on Investment Decision-Making

Muhammad  Salman; Bakhtiar  Khan; Aziz  Javed

doi:10.54692/ajss.2020.421052

Muhammad Salman Institute of Business Administration at Gomal University, Deera Ismail Khan, KPK, Pakistan
Bakhtiar Khan nstitute of Business Administration, Gomal University, Deera Ismail Khan, KPK, Pakistan.
Aziz Javed nstitute of Business Administration, Gomal University, Deera Ismail Khan, KPK, Pakistan

DOI: https://doi.org/10.54692/ajss.2020.421052

Keywords: External Locus of Control, Heuristic Representativeness Bias, Investment DecisionMaking, Moderated Mediation, Risk Tolerance

Abstract

The purpose of the existing study is to examine the influence of heuristic representativeness bias (HRB) on investment decision-making (IDM) by moderated mediation of external locus of control (ELC) and risk tolerance (RT) in the Pakistan Stock Exchange (PSX). A convenient sampling technique was used for the collection of research data from 385 individual stock investors. Results reveal that RT mediates the association between HRB and IDM. Besides, this study findings also indicate that the association between HRB and IDM is moderated mediated by ELC and RT. Meanwhile, the study outcomes entitlements that ELC reinforces the effect of HRB on investors' risk-taking proclivity that enable them in investment decisions.