“The Interplay of Social Media Content, Emotional Engagement, and Overconfidence in Shaping Investors Investment Decisions"

Abstract

This study explores the intricate relationship between attitude towards social media content, emotional engagement, overconfidence, and their combined impact on investor investment decision, alongside exploring the moderating impacts of social media intensity. Drawing on Gratifications Theory, Cognitive Dissonance Theory, and Prospect Theory, the research examines how social media contents influence investor decision making behavior. To meet the objective, we conducted a survey of 491 social media users among Indian retail investors who have been actively investing in the stock market for a minimum period of three years and spend a minimum 2 hours daily on social media platforms. The analysis has been done using SPSS (AMOS 24) and Process macro (model 1) for moderation effect. Purposive and snowball sampling techniques have been employed for data collection. Findings reveal that social media content has a significant impact on irrational decision in the stock market.  The increasing use of social media by retail investors directly impacts their emotional engagement with market-related content, and this emotional involvement, in turn, fosters a sense of overconfidence in their investment choices. Consequently, overconfident investors make riskier decisions, underestimate potential losses, and are susceptible to biases like herd behavior. This study highlights the psychological mechanisms driving these behaviors and emphasizes the need for greater awareness and regulatory measures to mitigate the risks associated with social media influence on investment decisions.