The Impact of Cognitive Biases on Investment Decisions: A Systematic Review of Individual Investors in Tehran Stock Exchange

This systematic review examines the impact of cognitive biases on investment decisions among individual investors in Tehran Stock Exchange (TSE). Following the PRISMA ۲۰۲۰ guidelines, we analyzed ۳۲ empirical studies published between ۲۰۱۸-۲۰۲۴ from databases including Scopus, Web of Science, and ScienceDirect. The review identifies five predominant cognitive biases: loss aversion, overconfidence, confirmation bias, anchoring, and herding behavior. Results demonstrate that these biases significantly influence trading frequency, portfolio diversification, and ultimately lead to diminished investment performance. Investors exhibiting these biases showed ۳-۷% lower annual returns compared to more rational decision-makers. The findings underscore the critical need for targeted investor education programs, behavioral interventions, and regulatory measures to mitigate bias effects in emerging markets. This synthesis provides valuable insights for investors, financial advisors, and policymakers, contributing to improved decision-making processes and market stability in the TSE and similar emerging markets.

Keywords:

cognitive biases , investment decisions , behavioral finance , systematic review , Tehran Stock Exchange , individual investors