| dc.description.abstract | Behavioral finance has developed greatly in line with the increasing number of market anomalies
which could not be explained by traditional theories. Additionally, there being no consensus
among financial researchers concerning the validity of behavioral finance means that the
behavioral concept is still open to future research. This study aimed to mirror the effects of
behavioral factors on investment decisions in Mutual fund by individual investors in Kenya. The
study was guided by four theories; prospect theory, heuristic theory, expected utility theory and
Herding theory. The study focused on specific objectives of Overconfidence, Herding,
Representativeness and Availability bias as the major behavioral factors known to influence
investment decision making. Demographic factors were also included which had the role of
controlling variables. The study employed descriptive research that employed a case study
targeting a population of all clients of the 19 registered funds in Nairobi County. A convenient
sample of 57 respondents was determined using snow ball sampling procedure. Primary data was
collected through the use of a 4-Likert scale questionnaire. A regression model was used to
establish the type relationship between the variables and SPSS software was used for
analysis.The study findings revealed a significant positive relationship between Availability bias
factors and investment decisions in mutual funds. The study however revealed insignificant but
positive relationships between Overconfidence, Herding and Representative Bias as the main
factors of study. The study also found that demographic factors which had a controlling role have
an insignifant negativerelationship with investment decisions. The study concluded that
investment decisions in mutual funds by individual investors in Kenya are influenced by
behavioral factors but the influence is not significant. The study recommends that the study be
extended to other counties in Kenya using a larger sample size to determine reliability of the
results. | en_US |
