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Bailard, Biehl and Kaiser Five-way Model and Behavioral Biases Influencing Individual Investors’ Decisions in the Indian Capital Market

Vol 7 , Issue 2 , July - December 2020 | Pages: 1-30 | Research Paper  

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Author Details ( * ) denotes Corresponding author

1. * Aniket Kalbhor, Student, Faculty of Management and Commerce, M. S. Ramaiah University of Applied Sciences, Bengaluru, Karnataka, India (
2. Uday Kumar Jagannathan, Assistant Professor, Faculty of Management and Commerce, M. S. Ramaiah University of Applied Sciences, Bengaluru, Karnataka, India (

This study explores the relationship between behavioural biases (disposition effect, anchoring and herding) influencing individual investors’ decision-making, demographics and the investor personalities (Adventurer, Celebrity, Guardian, Individualist and Straight Arrow) classified according to the BB&K five-way model. A structured questionnaire is used to obtain 241 responses from individual investors who invest in the Indian capital market. Factor analysis is carried out and structural equation modeling (SEM) is employed to examine the relationships between investor personalities, demographics and behavioural biases. The findings show that the personalities of Individualist and Guardian have a significant relationship with all three biases; Celebrity and Straight Arrow have a significant relationship with anchoring and herding biases; and Adventurer has a significant relationship with only herding bias. Further, demographics are found to have a significant relationship with the biases and all the personalities except for Straight Arrow. This research indicates that investors’ decisions are significantly influenced by the prevailing biases and provides strong indicators of the irrationality and inefficiency of the capital market. This study could give a new insight into the behaviour, psychology and personalities of individual investors in the Indian capital market as well as aid the financial advisors to better their products and services.


Behavioral finance, Investor decision-making; Five-way model; Disposition effect bias; Anchoring bias; Herding bias.

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