Behavioural Biases in IPO Market

Traditional finance models make many unrealistic assumptions about investors rationality, perfect competition, information asymmetry etc. These assumptions are not valid in real world market. Extant researches show that investors are not rational in their decisions and are biased in their investment behaviour. Researchers have identified several Behavioural Biases. There is lack of research available about Behavioural Bias for IPO Markets. The study identifies eleven Behaviour Biases and attempts to examine the them in IPO Market by conducting a primary study in the state of Gujarat. The study proves that the investors show Behaviour Bias in their investment decisions in IPO Market. Overall Investors exhibit Loss Aversion Bias, Stories to Facts Bias, Recency Bias, & Overconfidence Bias. While they are not biased for Confirmation, Self-Serving, Planning Fallacy, Choice Paralysis, Herding, Rule of Thumb and Disposition Effect. The investors are different when evaluated for association between location and Behavioural Biases. Surat is among the most biased Investors having nine biases. The Investors of Rajkot have five biases and for three they are unbiased. While Investors of Vadodara are just one bias and being unbiased to seven Behavioural Bias.