Exploring behavioral biases and real estate investment in Pakistan: does personality Type A or B matter?

Purpose This study aims to investigate the impact of behavioral biases and A/B personality types on real estate investment decisions in Pakistan. It explores how overconfidence, herding bias (HB), disposition bias and availability bias (AB) influence investors’ decision-making in the real estate market, while also assessing the role of personality type as a mediator. Design/methodology/approach A quantitative research design was used, using a structured questionnaire distributed to 550 real estate investors, with 410 valid responses analyzed through partial least squares structural equation modeling. Findings The findings suggest that overconfidence, AB and disposition bias significantly impact real estate investment decisions, mediated by A/B personality types. Conversely, HB showed no significant relationship with A/B personality or real estate investment decisions. Practical implications This study highlights the relevance of behavioral biases in investment decision-making and underscores the role of personality traits, providing insights for investors and policymakers aiming to enhance decision-making processes in the real estate sector. Originality/value Real-estate sector is highly inefficient because of excessive human elements and asymmetric information mainly because of heuristics and price fluctuations in real estate sector cannot be justified by the economic fundamentals. Consequently, the psychological, social and emotional sides of real estate are typically disregarded and a large amount of behavioral decision-making goes unnoticed. Although there is a lot of behavioral research in the stock market, there is not much in the real estate market, and it is largely targeted toward institutional investors. Limited research has explored the link between A/B personality and financial risk tolerance, but studies suggest Type A individuals face higher financial risk due to their goal-oriented nature.