Volume 17 No 3 (2019)
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Information flow and Heuristic Investment Behaviour and Decision Making- An Analysis
Sabu E.G.
Abstract
This study investigates the critical role of continuous information flow in shaping heuristic investment behavior among stock market investors. Information flow, encompassing the dissemination of news, data, insights, and interpretations, is essential for enabling informed and rational investment decisions. Historically, limited access to credible information and reliance on market consultants or websites posed significant barriers for investors, particularly the general public. Challenges such as fear of risk, lack of technical expertise, limited predictive capabilities, and untimely advice further hindered participation in stock market activities. However, the advent of advanced technological systems has addressed these issues by providing continuous, reliable, and accurate data, encouraging broader participation in financial markets.Heuristic investment behavior refers to the mental shortcuts or simplified strategies investors adopt to navigate complex financial environments. Continuous information flow not only supports these heuristics but also reinforces their application by delivering timely data, enabling quicker and more confident decision-making. Drawing on foundational literature, including the works of Kahneman and Tversky (1979), this study explores the mutual influence of information flow and heuristic behavior in shaping financial markets.Despite the advantages, reliance on heuristics introduces potential biases, such as overconfidence, herding, and loss aversion, which can negatively impact investment outcomes. The findings aim to provide insights into how technological advancements and real-time information systems shape investor behavior in contemporary financial markets. This study contributes to the broader discourse on optimizing information dissemination practices to support rational and effective decision-making in the evolving landscape of global finance.
Keywords
Continuous Information Flow, Heuristic Investment Behavior, Stock Market Decision-Making, Technological Advancements, Investor Biases
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