2023-2024 Faculty Research Grant

Williams Peprah (Accounting, Economics & Finance).

The Mediating Effect of COVID-19 Pandemic on Heuristic Techniques and Cognitive Biases on Investment Decision-Making.

The uncertainty of the global economy due Covid-19 pandemic has heightened the risk of investments. The social environment in which investors operate also shapes their sentiments, feelings, optimism, and pessimism regarding future stock prices. Could it be that the capital market has been impacted by investors' psychology over the covid-19 pandemic and has provided information about what drives speculative tendencies, market anomalies, and extreme market crash scenarios? During the Covid-19 period, the stock markets experienced a rapid decline in response to the investors’ unpredictable emotions. This research gap requires investigation to understand how and why Covid-19 pandemic influences investors’ decision-making as correlated to the existing heuristic techniques and cognitive biases. The study uses mediation approach and snowball sampling to get at least 462 investors who have directly and indirectly authorized stock trading in the US from March 11, 2022, to respond to self-constructed cross-sectional Likert-scale survey questionnaire which will be validated internally with Cronbach Alpha. The findings will help to explain how and why the covid-19 pandemic is affecting the capital market in the US based on investors calculated guess on prior knowledge and unintentional error in thinking of their worldview. The study considers representativeness, anchoring and availability as the heuristic techniques and overconfidence bias, and disposition effect presented as the cognitive biases.