The Effects of cognitive biases on investment decisions among retail investors at the Nairobi Securities Exchange

Simple item page
dc.contributor.authorSheikh, S. A.
dc.date.accessioned2025-08-12T06:58:21Z
dc.date.available2025-08-12T06:58:21Z
dc.date.issued2025
dc.descriptionFull - text thesis
dc.description.abstractFinancial markets play a crucial role in economic development through capital mobilization and allocation, yet retail investor participation in the Nairobi Securities Exchange (NSE) remains low despite various policy interventions. While traditional finance theories such as the modern portfolio theory assume investor rationality, behavioral finance theories such as the prospect theory recognize that psychological factors significantly influence investment decisions. This research investigated the effects of cognitive biases on retail investors' investment decisions in the Nairobi Securities Exchange (NSE). The specific objectives were to investigate the effect of anchoring, illusion of control and loss aversion biases on retail investment decisions retail at the NSE, Kenya. The study surveyed 88 active retail investors in April 2025 in Nairobi County using structured questionnaires that were administered online. The study adopted a quantitative approach to collect and analysing data the Statistical Package for Social Sciences. The collected data was coded and classified appropriately to ensure responses were processed correctly. It was revealed that all three behavioral biases, anchoring bias illusion of control bias, and loss aversion bias had a positive significant influence on retail investors' investment decisions at the NSE. The study recommends intensified investor education programs to address these behavioral biases, collaboration among regulatory bodies and financial advisors to develop training on rational investment approaches as well as incorporation of behavioral awareness into financial literacy campaigns to help investors recognize and mitigate the impact of psychological biases on their financial choices. The study limitations were that of overreliance reliance on self-reported data, which may be subject to bias in social desirability or inaccurate self-assessment. It also focused on individual investors at the Nairobi Securities Exchange, which may limit the generalizability of the findings to institutional investors or investors in other markets. Key terms: Cognitive biases, Investor behavior, Nairobi Stock Exchange.
dc.identifier.citationSheikh, S. A. (2025). The Effects of cognitive biases on investment decisions among retail investors at the Nairobi Securities Exchange [Strathmore University]. http://hdl.handle.net/11071/15752
dc.identifier.urihttp://hdl.handle.net/11071/15752
dc.language.isoen
dc.publisherStrathmore University
dc.titleThe Effects of cognitive biases on investment decisions among retail investors at the Nairobi Securities Exchange
dc.typeThesis
Files
Original bundle
Now showing 1 - 1 of 1
Thumbnail Image
Name:
The Effects of cognitive biases on investment decisions among retail investors at the Nairobi Securities Exchange.pdf
Size:
1.26 MB
Format:
Adobe Portable Document Format
Description:
Full - text thesis
Download
License bundle
Now showing 1 - 1 of 1
Thumbnail Image
Name:
license.txt
Size:
1.71 KB
Format:
Item-specific license agreed upon to submission
Description:
Download
Collections
MCOM Theses and Dissertations (2025)