A critical review of FOMO behaviour among young investors
Main Article Content
Abstract
The fear of missing out (FOMO) is the emotional feeling of missing out on the opportunity to gain a fulfilling experience. FOMO is a behavioural trait that influences an individual’s decisions such as utilising social media, adopting new technology, crowdfunding, and investing in the equity market. Young investors with FOMO behaviour might mimic what other investors do in fear of missing out on the opportunity for a higher return in the financial market. The purpose of this paper is to understand the concept of FOMO and review what researchers have discovered about FOMO behaviour among young investors. Based on these recent findings on FOMO behaviour, it can be concluded that a volatile market, risk-averse investors, and perceived market efficiency are critical factors of FOMO behaviour among young investors. The risk-averse attitude, subjective norms of perceived market efficiency and perceived control behaviour during market volatility could be examined based on the TPB model.
Article Details
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.
References
Adil, M., Singh, Y., & Ansari, M. S. (2022). Does financial literacy affect an investor’s planned behavior as a moderator? Managerial Finance, 48(9–10), 1372–1390. https://doi.org/10.1108/MF-03-2021-0130
Ahmad, M. (2021). Does underconfidence matter in short-term and long-term investment decisions? Evidence from an emerging market. Management Decision, 59(3), 692–709. https://doi.org/10.1108/MD-07-2019-0972
Ahmad, M., & Wu, Q. (2022). Does herding behavior matter in investment management and perceived market efficiency? Evidence from an emerging market. Management Decision, 60(8), 2148–2173. https://doi.org/10.1108/MD-07-2020-0867
Ajzen, I. (1991). The theory of planned behaviour. Organisational Behaviour and Human Decision Processes, 50(2), 179-211.
Ajzen, I., & Fishbein, M. (1980). Understanding attitudes and predicting social behaviour. Englewood Cliffs, NJ: Prentice Hall.
Charron, J. (2017). Inefficient Debate. The EMH, the “Remarkable Error” and a Question of Point of View. Accounting, Economics, and Law: A Convivium, 7(3), 20150021. https://doi.org/10.1515/ael-2015-0021
Ferreruela, S., & Mallor, T. (2021). Herding in the bad times: The 2008 and COVID-19 crises. North American Journal of Economics and Finance, 58(August), 101531. https://doi.org/10.1016/j.najef.2021.101531
Gartner, J., Fink, M., & Maresch, D. (2022). The Role of Fear of Missing Out and Experience in the Formation of SME Decision Makers’ Intentions to Adopt New Manufacturing Technologies. Technological Forecasting and Social Change, 180(March 2021), 121723. https://doi.org/10.1016/j.techfore.2022.121723
Goyal, P., Gupta, P., & Yadav, V. (2021). Antecedents to heuristics: decoding the role of herding and prospect theory for Indian millennial investors. Review of Behavioral Finance, 15(1), 79–102. https://doi.org/10.1108/RBF-04-2021-0073
Gupta, S., & Shrivastava, M. (2022). Herding and loss aversion in stock markets: mediating role of fear of missing out (FOMO) in retail investors. International Journal of Emerging Markets, 17(7), 1720–1737. https://doi.org/10.1108/IJOEM-08-2020-0933
Hodkinson, C. (2019). ‘Fear of Missing Out’ (FOMO) marketing appeals: A conceptual model. Journal of Marketing Communications, 25(1), 65–88. https://doi.org/10.1080/13527266.2016.1234504
Humayun Kabir, M., & Shakur, S. (2018). Regime-dependent herding behavior in Asian and Latin American stock markets. Pacific Basin Finance Journal, 47(September 2016), 60–78. https://doi.org/10.1016/j.pacfin.2017.12.002
Kang, I., Cui, H., & Son, J. (2019). Conformity consumption behavior and FoMO. Sustainability (Switzerland), 11(17), 4734. https://doi.org/10.3390/su11174734
Khan, I., Afeef, M., Jan, S., & Ihsan, A. (2020). The impact of heuristic biases on investors’ investment decision in Pakistan stock market: moderating role of long term orientation. Qualitative Research in Financial Markets, 13(2), 252–274. https://doi.org/10.1108/QRFM-03-2020-0028
Kumari, S., Chandra, B., & Pattanayak, J. K. (2020). Personality traits and motivation of individual investors towards herding behaviour in Indian stock market. Kybernetes, 49(2), 384–405. https://doi.org/10.1108/K-11-2018-0635
Misra, R., Goel, P., & Srivastava, S. (2021). Examining drivers and deterrents of individuals’ investment intentions: a qualitative multistage analysis. Qualitative Research in Financial Markets, 13(5), 608–631. https://doi.org/10.1108/QRFM-07-2020-0135
Nath, H. B., & Brooks, R. D. (2020). Investor-herding and risk-profiles: A State-Space model-based assessment. Pacific Basin Finance Journal, 62(January), 101383. https://doi.org/10.1016/j.pacfin.2020.101383
Perras, P., & Wagner, N. (2020). Pricing equity-bond covariance risk: Between flight-to-quality and fear-of-missing-out. Journal of Economic Dynamics and Control, 121, 104009. https://doi.org/10.1016/j.jedc.2020.104009
Potsaid, T., & Venkataraman, S. (2022). Trading restrictions and investor reaction to non-gains, non-losses, and the fear of missing out: Experimental evidence. Journal of Behavioral and Experimental Finance, 33, 100597. https://doi.org/10.1016/j.jbef.2021.100597
Przybylski, A. K., Murayama, K., Dehaan, C. R., & Gladwell, V. (2013). Motivational, emotional, and behavioral correlates of fear of missing out. Computers in Human Behavior, 29(4), 1841–1848. https://doi.org/10.1016/j.chb.2013.02.014
Rahman, M., & Gan, S. S. (2020). Generation Y investment decision: an analysis using behavioural factors. Managerial Finance, 46(8), 1023–1041. https://doi.org/10.1108/MF-10-2018-0534
Raut, R. K. (2020). Past behaviour, financial literacy and investment decision-making process of individual investors. International Journal of Emerging Markets, 15(6), 1243–1263. https://doi.org/10.1108/IJOEM-07-2018-0379
Sabia, L., Bell, R., & Bozward, D. (2022). Big fish: Leveraging the fear of missing out in equity crowdfunding in the post-COVID-19 era. Business Horizons, 65(1), 59–67. https://doi.org/10.1016/j.bushor.2021.09.006
Stead, H., & Bibby, P. A. (2017). Personality, fear of missing out and problematic internet use and their relationship to subjective well-being. Computers in Human Behavior, 76, 534–540. https://doi.org/10.1016/j.chb.2017.08.016
World Economic Outlook Report October 2022 (2022) International Monetary Fund. Available at: https://doi.org/10.1002/wow3.177.