ABSTRACT
The current study investigates the behavioural effect on investment decisions made by investors in the Pakistan Stock Exchange (PSX). Data were gathered through a survey using proven items from past literature as reliable and efficient parameters for collecting this information. Questionnaires were distributed among investors in the stock market using convenience sampling. This study utilized multiregression techniques combined with structural equation modelling techniques (SEM) using SmartPLS-4.0 for statistical analysis. The present study provides a theoretical framework for exploring investors’ decision-making processes in the Pakistani stock market by employing prospect theory. Current research incorporates the affect of information searches on investors behaviour, herding effects, heuristics and market variable. The results demonstrate how heuristics, herding and variables significantly impact decisions made by investors in stock markets, making clear their significance in search results. The study offers practical and theoretical implications by extending prospect theory; its findings also offer practical guidelines for policymakers and practitioners who wish to understand how behaviour impacts financial decisions in a developing economy stock market.
