DYNAMICS OF OVERCONFIDENCE AMONG STOCK MARKET INVESTORS IN PAKISTAN

In behavioral finance, the prime focus is on psychological determinants of an individual's decision making. Factors including personality traits and behavioral biases helped answering where the traditional rational paradigm of finance failed to explain, this study extend this avenue by identifying the influence of overconfidence and how its effects varies among personalities by considering the moderating impact of locus of control. The study is quantitative and data collection is done using a survey questionnaire from investors operating in Islamabad Pakistan. The results indicated that there exists significant relationship of overconfidence with investor's decisions and this relation is being significantly moderated by locus of control indicating the possibility of predictability of biased behavior from individual's personality. These findings are helpful for understanding the real life financial behavior and are significant for investors, managers and brokers in identifying and overcoming irrational exuberance and is useful for policy makers in policy making. Disciplinary: Management & Economic Sciences (Finance). (C) 2020 INT TRANS J ENG MANAG SCI TECH.