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Does individual heterogeneity shape retail investor behaviour?

Abhijeet Chandra (Vinod Gupta School of Management, Indian Institute of Technology Kharagpur, Kharagpur, India)
Kantesha Sanningammanavara (Department of Business Administration, Vidyavardhaka College of Engineering, Mysuru, India)
A. Satya Nandini (Department of Management Studies and Research Centre, Businayana Mukundadas Sreenivasaiah College of Engineering, Bangalore, India)

International Journal of Social Economics

ISSN: 0306-8293

Article publication date: 8 May 2017




The purpose of this paper is to survey retail investors to study the determinants of their investment behaviour and show that individual heterogeneity and financial factors such as gender, age, educational status, income, and investment levels determine their trading behaviour across three domains; however, features such as marital status and occupation do not play any significant role in shaping their trading behaviour.


Structured surveys are conducted on retail and small investors using the brokerage services of a firm. Data collected from primary methods are used for statistical analysis in ANOVA and multiple regression frameworks.


The authors also report that retail investors’ self-perceived confidence as a function of both expected and unexpected changes in the market and personal factors largely determines trading behaviour of retail investors and that self-perceived confidence level and self-reported portfolio size are positively associated implying that (over-)confident retail investors tend to believe that their investment skills being superior are bound to perform better and thus they typically hold larger than average investment portfolios.

Practical implications

These findings are significant because research on cross-sectional variance of individual investment behaviour explains how investor heterogeneity plays a critical role in investment and asset allocation decisions. Investors, researchers, and practitioners would use the results for financial decision making specifically related to personal finance, behavioural portfolio management, and investment advisory.


This paper is an empirical approach to explore the retail investor behaviour using psychometric approach with respect to self-perceived confidence and other perceived measures of investor behaviour. The authors contribute to the emerging set of literature on investor behaviour and behavioural finance.



The authors would like to thank the Editor of the Journal, Colin Tyler, and two anonymous reviewers, whose comments and suggestions benefitted this paper a lot. The authors are also grateful to M. Thenmozhi, Ravinder Kumar, Renu Vashisth, and Wasim Ahmad for their constructive comments and feedback, and of course, to the survey participants without whom this research would not have been materialized. Support from the financial brokerage firm in data collection is also gratefully acknowledged. Usual disclaimers apply.


Chandra, A., Sanningammanavara, K. and Nandini, A.S. (2017), "Does individual heterogeneity shape retail investor behaviour?", International Journal of Social Economics, Vol. 44 No. 5, pp. 578-593.



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