Rationality and Behavioural Factors Effects on Investors Investment Decision Making in PSX

The Present study investigated the influence and correlation of rationality & behavioral factors in financial investment decision making in PSX. The study uses a descriptive research design based on the survey method through developed structured questionnaire and used convenience sampling technique for data collection. The population of this study of small investors of PSX. The sample size is 384 w.e.f. January 2019 to January 2020. Collected data are analyzed using SPSS23.0 and (SEM) using AMOS22.0. The findings reveal that rationality (1-problem identification), (2-information search), (3-alternative evaluation) and four behavioral factors (1-overconfidence), (2-herd behavior), (4-anchoring) have a statistically significant positive Effects on investors' Investment decision Making. Accordingly, the results of the path analysis showed a significant positive Effects of rationality factors 1-problem identification (β=0.31) 2-information search (β=0.41) 3- evaluation alternatives (β=0.13) on investors' investment decisions formation at p<0.001. Similarly, path analysis results also showed a significant positive Effects of behavioural factors 1-overconfidence (β=0.32) 2-gaming behavior (β=0.31) 3-anchoring (β=0.49) on investors' investment decisions at p < 0.001. This study also established a significant positive correlation between rationality 1-problem identification 2-information search 3-evaluation of alternatives) and behavioral factors 1-overconfidence 2-herd behavior 3-anchoring). These findings help individual and Organizational investors to be aware of various factors and develop "adaptive toolkits" for rational and consistent investment decisions in PSX.