The INVESTMENT DECISION BASED ON ACQUAINTANCE STRATEGY

Abstract

Everywhere people talk about money and investment. The investor makes an investment to yield high returns with minimum risk. Generally the acquaintance refers to the neighbours. The investment decisions which is seen as continuous process of interactions between the investor, investor’s behaviour and the investment environment. This investment process is influenced by a number of variables and driven by peer influence (including neighbours, friends, relatives, etc.). The experimental results show the decisions made by others, influence individual investor’s choices irrespective of whether the payoffs are based on the individual’s investment decision. Nevertheless the investor should select their personal utility-maximizing choice. So it becomes important framing effects on investment choices based on the neighbour’s choice. This paper discusses the investor’s behaviour and the factors that affect the investment choice and decision and the role of ‘acquaintance or neighbour’ strategy in investment decision.