Gyan Management

Unraveling FOMO Relations with Behavioral Biases on Investment Decision: A Study on the Psychology of Investor’s Behavior

Rakshika¹ and Hareesh Kumar T.¹

First Published 2 Jun 2025. https://doi.org/10.1177/09747621251338974

Article Information

Corresponding Author:

Hareesh Kumar T., Department of Financial Administration, School of Management, Central University of Punjab, Bathinda, Punjab 151401, India.
Email: hareesh.kumar@cup.edu.in

¹Department of Financial Administration, School of Management, Central University of Punjab, Bathinda, Punjab, India

Creative Commons Non Commercial CC BY-NC: This article is distributed under the terms of the Creative Commons Attribution-NonCommercial 4.0 License (http://www.creativecommons.org/licenses/by-nc/4.0/) which permits non-Commercial use, reproduction and distribution of the work without further permission provided the original work is attributed.

Abstract

The continuous digital revolution has changed the way investors conduct research, exchange ideas, and carry out investment plans. Simultaneously, social media platforms have become vibrant sources of real-time market sentiment research, crowdsourcing investment ideas, and financial news. The core objective of the study is to examine the connection between fear of missing out (FOMO) and significant behavioral biases, including herd mentality, overconfidence, loss aversion, and availability heuristics. A qualitative study methodology was used, including a literature assessment of previous studies on behavioral finance, FOMO, and investing decisions. FOMO is the term used to characterize generalized anxiety that is brought on by the idea of losing out on something that other people find enjoyable or have. The results show that FOMO has a major impact on investors by increasing their emotional responses to market developments. This leads them to make illogical choices, emphasizing short-term rewards above long-term financial security. By analyzing the body of prior research and expanding the theoretical understanding of the intellectual underpinnings and social structure of behavioral biases, this study offers unique insights for government, policymakers, brokerage firms, financial planners, and investors. This study highlights the need to address digital and social media behavioral biases, which significantly impact investment decisions in an interconnected world.

Keywords

Herding bias, overconfidence, loss aversion, availability heuristics, FOMO, investment decision

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