Influence of Overconfidence Bias on Investment Decision Behaviour: The Moderating Role of Financial Literacy and Investment Experience among Corporate Employees in Mumbai

Abstract

The investment decisions play a key role in life of individuals and family life. This study examines the influence of overconfidence bias on investment decision behaviour among corporate employees in Mumbai, with particular emphasis on the moderating roles of financial literacy and investment experience. Using a quantitative, cross-sectional, explanatory research design, primary data were collected through a structured questionnaire from 184 eligible corporate employees with investment exposure; 164 usable responses were included in the final analyses. The study measured overconfidence, investment decision behaviour, and self-assessed financial literacy using multi-item Likert scales, while investment experience was assessed through years of investment participation. Reliability, descriptive statistics, Pearson correlation, regression, and moderated regression analyses were performed using Jamovi. The measurement scales showed acceptable internal consistency, with Cronbach’s alpha values ranging from .668 to .761. Overconfidence was not significantly associated with investment decision behaviour at the bivariate level. However, moderation analysis showed that investment experience significantly weakened the relationship between overconfidence and unfavourable investment decision behaviour (B=−0.255, p=.006) (B = -0.255, p = .006) (B=−0.255, p=.006). Financial literacy significantly strengthened this relationship (B=0.229, p=.034) (B = 0.229, p = .034) (B=0.229, p=.034), indicating that financially literate employees with greater confidence may be more likely to act on their perceived investment ability. The findings suggest that overconfidence is not a uniform or independent predictor of investment decision behaviour; rather, its influence depends on investors’ knowledge and practical market exposure. The study contributes to behavioural finance literature by providing evidence from corporate employees in Mumbai and highlights the importance of workplace financial-wellness programmes that promote informed confidence, risk awareness, diversification, and experiential learning.