Herding Bias and Investment Decision Making — a Systematic Literature Review
Abstract
The issue of herding bias and investment decision-making has been extremely important in recent times to understand the irrationality of investors. This study comprehensively analyzes the literature on herding bias and investment decision-making to understand the various dimensions of herding biases and their impact on the decision-making of investors. A systematic literature review of relevant research papers from leading databases was conducted to determine the current research trends, develop a nomological network by identifying the variables used as antecedents, mediators, moderators, and outcomes, and highlight the most popular theories referred in studies. The findings of this study reveal behavioural biases, herding bias, investment decision-making as the main thematic domains. Further, the study also found a dearth of literature, especially relating to collectivist and individualistic societies, and concluded that future studies should also contemplate different psychological and social aspects, such as trading behaviour and investor patterns while studying the impact of herding bias on decision-making of investors.