The Mediating Role of Psychological Bias Between Relationship of National Culture Dementias and Irrational Behaviors

Cognitive biases and irrational behavior may be derived from collectively beliefs and values or dominant society culture. The incidence of such behavior could cause inefficiencies of capital markets, especially by investors and in decision-making process, in the stock market. In this regard, the present study, Future Oriented and Uncertainty Avoidance as the two dimensions of national culture were selected based on previous studies. Cognitive Biases in the form of five components,Overconfidence, Self-Attribution, Recenc, Ambiguity Aversion & Conservatism as a mediator variable and irrational behavior includes four dimensions, Herd Behavior, Gamblers, Law of Small Numbers & Home Bias, as a dependent variable were determined. The study sample included 424 individual investors from the stock exchange.To collecting data; Likert 5-point scale was used. Reliability and validity was confirmed respectively through Cronbach's alpha coefficient, content and construct validity using confirmatory factor analysis.In order to model fitting and testing the hypotheses, SPSS18 and Amos was used. The results show that the dimension of Future Oriented have a significant relationship with cognitive biases (significance coefficient 2.126) and irrational behaviors (3.448) while dimension of Uncertainty Avoidance was not significantly correlated with cognitive biases (-0.87) and irrational behaviors (through the mediation of cognitive biases significance coefficient 2.127).