“Investment Decision Dilemma: A Study on Young Professionals in Bengaluru”

Behavioural finance, neurofinance, cognitive biases, investment decisions, Bengaluru, young professionals, loss aversion, financial literacy

Classical financial theories assume that investors are rational actors, making decisions solely on risk–return trade-offs and available information. In practice, cognitive limitations, emotional responses, and ingrained psychological biases systematically distort financial judgment. This study investigates the nature and extent of such biases among young professionals aged 23–31 in Bengaluru—one of India’s fastest-growing investor demographics—grounded in the frameworks of behavioural finance and neurofinance. Employing a mixed-method design, the research combines a structured survey (n = 71) with fifteen in-depth interviews across North, South, and East Bengaluru. Three objectives guide the study: to identify common psychological biases affecting investment decisions; to analyse the role of emotions and mental processes in shaping those decisions; and to provide insights into how financial literacy and awareness can reduce the impact of such biases. Key findings reveal that familiarity bias is the most pervasive distortion, with 74.6% of respondents always or sometimes preferring sectors familiar to them. Overconfidence is evident in the 38% who review portfolios weekly; 42.3% admitted to at least one impulsive decision in the past year; 69% rely on gut feeling frequently or occasionally; and a combined 53.5% are primarily influenced by news/media or peer activity, reflecting herd behaviour. In-depth interviews reinforced these patterns and surfaced a consistent gap between analytical intent and emotional execution, aligned with the empathy gap in behavioural economics. The study concludes that psychological biases are structurally embedded in this cohort’s investment behaviour and that effective mitigation requires practical in-the-moment decision support, pre-commitment mechanisms, and applied financial literacy—not awareness alone. Targeted recommendations are offered for financial advisors, fintech platforms, and educational institutions.