Author(s): Adane Agegn
This study examined behavioral factors influencing investment decision using micro-level data from individual investors in Amhara Region of Ethiopia. The study employed an explanatory research design with a target population of individual investors who invest their money in manufacturing, trade and service sectors. Data collected using survey questionnaire from 235 individual investors. The empirical results using multinomial logistic regression revealed that representativeness bias, mental accounting, loss aversion bias, regret aversion bias and herding behavior has significant influence on investment decision of individual investors. Accordingly, government should give attention through formulating and implementing better policies to minimize negative impact of behavioral factors on investment decision, and investors should evaluate information objectively and independently before relying on others investor’s action.