Smart or Swayed? The Role of Behavioral Biases, Financial Literacy, and Robo-Advisory Adoption in Shaping Investment Decisions

Abstract: This study looks at how behavioral biases and financial knowledge affect investment decisions among Gen Z and Millennial investors, focusing on differences between the age groups. Using primary survey data, the study uses descriptive statistics, chi-square analysis, and multiple regression analysis to explore demographic differences and causal links. The results show that behavioral biases, especially overconfidence, herding, and the disposition effect, greatly affect investment choices for both generations, though with different levels of intensity. Financial knowledge has a positive effect on the quality of decisions and reduces the negative impacts of behavioral biases, particularly for Millennials. The regression results indicate that behavioral biases and financial knowledge together explain a significant portion of the differences in investment decision-making. The chi-square analysis also highlights notable age differences in investment behavior, with Gen Z more influenced by social and digital factors. This study adds to behavioral finance research by offering generational evidence from an emerging market and suggests ideas for targeted financial education and age-specific advice.