Search for a command to run...
Purpose The purpose of this study was to examine the impact of behavioral biases and social factors on financial satisfaction, with the mediating role of contrarian investment decisions. Additionally, we examined the moderating role of the need for cognition in the relationship between various behavioral biases and social factors to contrarian investment decisions. Design/methodology/approach The study employed a survey method to collect data at three different time waves from individual investors in the Pakistan Stock Exchange (PSX). Questionnaires were distributed among investors in Karachi, Lahore, and Islamabad, and a reasonable sample of 387 responses was received. Findings The results indicated that behavioral biases and social factors had a significant negative impact on contrarian investment decisions. Contrarian investment decisions positively predicted financial satisfaction and mediated the effects of behavioral biases and social factors on financial satisfaction. Furthermore, need for cognition significantly and positively moderated the relationships between status quo bias and contrarian investment decisions, and between confirmation bias and contrarian investment decisions. Among the social factors, need for cognition significantly moderated the relationship between information cascade and contrarian investment decisions. Practical implications From a practical perspective, this study underscores the importance of investment training programs designed to enhance analytical thinking skills. Such programs should equip investors with the ability to critically evaluate market trends, enabling them to make informed investment decisions rather than relying on cognitive biases or succumbing to social pressure. Financial market policymakers and regulators are encouraged to design improved investor protection policies that promote critical thinking, data-driven strategies, and the reduction of speculative behaviors in financial markets. Originality/value This study complements the dual-process model of System 1 and System 2 thinking. It provides nuanced insights by examining a holistic model comprising various social, behavioral, and attitudinal factors.