A Study on The Moderating Role of Time Preference on Psychological and Behavioural Factors Impacting Investment Decisions

Dr. J Sofia Vincent1, Mr. Vignesh S2

1Dr. J Sofia Vincent, Professor, Master Of Business Administration & Panimalar Engineering College, Chennai -600123

2Mr. Vignesh S, Student, Master Of Business Administration & Panimalar Engineering College, Chennai -600123

Abstract - The research explores the moderating effect of time preference on psychological and behavioural factors influencing investment decisions, focusing on internal processes such as confirmation bias, personality traits, risk tolerance, and impulsivity, along with behavioural aspects like framing effect, heuristic usage, information search behaviour, and disposition effect to understand real-world decision-making patterns. The study is based on primary data collected from 433 respondents through a structured questionnaire, and statistical tools such as descriptive statistics, ANOVA, and Structural Equation Modeling (SEM) were employed for analysis. The findings indicate that both psychological and behavioural factors significantly influence investment decisions, with investors often relying on emotions, past experiences, and mental shortcuts rather than purely rational analysis. Time preference plays a crucial moderating role by determining whether investors prioritize short-term gains or long-term benefits, where long-term oriented investors tend to make more stable and well-planned decisions, while short-term oriented investors are more influenced by market fluctuations, thereby emphasizing the importance of behavioural finance concepts in improving investment decision-making.