Designing a Decision-Making Model for Individual Investors in Portfolio Selection
Keywords:
Decision-making model, individual investors, portfolio selectionAbstract
This study aimed to design a decision-making model for individual investors in portfolio selection with emphasis on behavioral, cognitive, informational, environmental, and managerial factors. This applied study employed a mixed quantitative–qualitative design and was conducted as field research. The qualitative population consisted of active individual investors in the Tehran capital market with more than five years of continuous experience, stock market experts with more than ten years of professional experience, and experienced academics in accounting and financial management. Snowball sampling was used, and 16 experts were selected until theoretical saturation was achieved. Data were collected through library studies and semi-structured interviews. The qualitative data were analyzed using thematic analysis, followed by the fuzzy Delphi technique to validate the extracted themes. Interpretive structural modeling was then applied to determine causal–hierarchical relationships among the organizing themes. Instrument validity was assessed through face validity and the content validity ratio. The findings indicated that 161 basic themes were extracted from 222 initial codes. After applying the fuzzy Delphi technique, 137 basic themes were finally confirmed by the expert panel. These themes were categorized into 26 organizing themes and five global themes: financial and economic factors, psychological and behavioral factors, informational and knowledge-related factors, environmental and social factors, and portfolio-related factors. The interpretive structural model revealed a five-level hierarchy. Behavioral and cognitive factors, including cognitive biases, negative emotions, herd behavior, emotion regulation, and behavioral discipline, were positioned at the most fundamental level. Portfolio structuring, diversification, and investor-specific goal setting emerged as the final outcome level. Individual investors’ portfolio-selection decisions are shaped by a multidimensional interaction of cognitive, emotional, environmental, analytical, and risk-management factors. Improving decision quality therefore requires a systematic approach that begins with controlling behavioral biases and extends to structured analysis, information management, trading discipline, and integrated risk-management strategies.
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Copyright (c) 2025 Milad Asnaashari (Author); Abbas Ramezanzadeh Zeidi (Corresponding author); Seyed Rasool Masoumi (Author)
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