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Research Paper | Economics | Volume 15 Issue 3, March 2026 | Pages: 1903 - 1908 | India
Investment under Uncertainty: Effects of Investors' Knowledge and Age on Risk Preferences in the Indian Stock Market
Abstract: This paper examines how stock market knowledge and age of an investor influence his risk-appetite in the Indian stock market. It draws on three behavioural theories- theory of herd behaviour, prospect theory, and regret theory- to understand investor behaviour while making their investment decisions. Applying the logistic regression model on the primary data obtained through interviews with 86 investors, the research attempts to identify causal relationships between market knowledge, age and risk preference, where risk preference is proxied by the proportion of investment in small-cap stocks. We find that investors with better stock market knowledge exhibit greater risk appetite, while age appears to be negatively associated with risk-taking attitudes. In other words, the young and/or experienced investors tend to invest more in the risky portfolios indicting that more than half of their portfolios is comprising small and micro-cap stocks. These findings suggest that government should adopt steps towards improving and spreading investors? financial education in sustaining equity market participation in India.
Keywords: Risk Preference, Financial Literacy, Behavioural Finance, Logistic Regression, Indian Stock Markets, Investor Behaviour
How to Cite?: Dr. Promita Mukherjee, Biswajit Ray, Biswajit Mondal, "Investment under Uncertainty: Effects of Investors' Knowledge and Age on Risk Preferences in the Indian Stock Market", Volume 15 Issue 3, March 2026, International Journal of Science and Research (IJSR), Pages: 1903-1908, https://www.ijsr.net/getabstract.php?paperid=SR26326233913, DOI: https://dx.dx.doi.org/10.21275/SR26326233913