Factors Influencing Moroccan Individual Investor Behavior: Survey Evidence

Abstract

Investor’s behavior is affected by a variety of psychological heuristics and biases while making investment decisions. Efficient market hypothesis (EMH) accuracy to provide explanations for certain phenomena that occur in the financial markets seems limited. Behavioral finance has challenged this notion by highlighting the important role of behavioral and emotional factors in investor decision-making. In this paper, we investigate the cognitive biases to which Moroccan individual investors are subject mainly the overconfidence bias, herding behavior, loss and risk aversion. We conducted a survey study on a representative sample of individual investors in order to investigate whether they are affected by these biases when making investment decisions.