Behavioural finance and real estate
Student name: Mr Akhil Aggarwal
Guide: Dr Debdatta Saha and Mr. Soumendu Sarkar
Year of completion: 2014
Host Organisation: South Asian University, New Delhi & TERI University
Abstract: The study attempts to study whether individuals are risk-averse and exhibit fully rational
mean-variance optimisation in selecting their investment portfolio which also includes real
estate. The primary survey was conducted in the month of January-February, 2014 for 80
individuals which provided individuals a hypothetical situation to form a portfolio for three
different portfolio sizes over two time horizons. It also included various questions to capture
the behavioural bias of individuals in selecting these portfolios. The results indicate the
presence of irrationality in selecting the asset-mix for their portfolio. It has also been found
that individuals are not always risk averse in their investment decisions and tend to choose
risky asset-mix towards attaining certain goals and aspirations.
Keywords: Behavioural bias, irrationality, mean-variance optimization, jensen’s
measure, sharpe ratio.
