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Abstract
Making decisions in our daily life is complicated and making investment decisions is all the
more complicated. The traditional theories of finance stated that the investors are very rational
in making their investment decisions. However, this is far from reality. A new paradigm of
finance has developed, known as the Behavioral Finance Theory which clearly states that it is
not only the social and economic factors which affect the investors decision making process,
whereas there are several behavioural factors which may influence the investment decisions
made by individual investors. However, many investors are unaware of the fact that behavioural
factors affect investment decisions. Many of the behavioural biases like anchoring bias, social
proof bias, cognitive dissonance bias, mental accounting bias, endowment bias, choice paralysis
bias etc. Among the various behavioural biases influencing the investment decisions of the
investor’s, social proof bias is also a predominant one. Social proof bias is the tendency of
investors to follow the opinion, advice of others predominantly in making investment decisions.
It is also called as the herd mentality. People have a tendency to follow the crowd in making
investment decisions. The research study aims to investigate the influence of social proof bias by
considering gender as the basis for the study. The study is relevant as there is a need to identify
if social proof bias influences the investors in the true sense and if it has an influence there is a
need to find out ways of getting rid of the bias to avoid mistakes committed in making
investment decisions.