Availability Bias of Urban and Rural Investors: Relationship Study of the Gujarat State of India

Abhishek Sachan¹ and Pawan Kumar Chugan^2,

¹Quantitative Analyst, Quantile Analytics Co., Indore, Madhya Pradhesh, India

²Professor (Retd.), Institute of Management, Nirma University (IMNU), Visiting Professor IMNU and AIIM, Ahmedabad & PDPU, Gandhinagar, Gujarat and Fellow ISTD, India

Cite this paper:
Abhishek Sachan and Pawan Kumar Chugan. Availability Bias of Urban and Rural Investors: Relationship Study of the Gujarat State of India. Journal of Behavioural Economics, Finance, Entrepreneurship, Accounting and Transport. 2020; 8(1):1-6. doi: 10.12691/jbe-8-1-1

Abstract

Biases challenge ability of investors to make rational decisions. The knowledge of concentration of biases based on demographics of investors may have implications for wealth managers and policy makers. This study focuses on relationship between availability bias and urban-rural residence of individual investors. The study reports that place of residence significantly relates to availability bias. A person belonging to rural areas has higher probability to be susceptible to availability bias. Indian rural population has lower per capita incomes and has lower cushion to absorb financial losses, in such a scenario, cost of being biased is very high, for which this study implicates the requirement of credible and sufficient information sources to reduce the availability bias of investors. Wealth managers, hence, are required to develop different communication skills for rural clients in order to build consensus for optimum investment decisions.

Keywords:
availability bias behavioural finance behavioural economics cognitive bias investor demographics investor education investor information individual investors

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