Cognitive Biases as Predictors of Digital Fraud Victimization: An Empirical Study of Retail Banking Customers

Abstract

Digital banking has increased the speed and convenience of financial transactions while simultaneously creating opportunities for fraud schemes that exploit human judgment. This study examined whether four cognitive-bias constructs—confirmation bias, anchoring bias, loss aversion and availability heuristic—were associated with self-reported digital-fraud victimization among retail banking customers. A quantitative, cross-sectional, predictive-correlational design was used. The final dataset contained 123 complete survey responses. Cognitive-bias composites were computed as item means, while the victimization index was calculated from 11 frequency-coded fraud-incident items covering attempted or successful incidents during the preceding 12 months. Descriptive statistics, internal-consistency reliability, correlations, hierarchical multiple regression with HC3 robust standard errors, negative-binomial sensitivity analysis, demographic comparisons and exploratory moderation analyses were conducted. All four bias measures showed good to excellent internal consistency (Cronbach’s α=.838–.921). Victimization correlated most strongly with loss aversion (r=.461) and anchoring bias (r=.385). In the adjusted regression model, anchoring bias (B=2.505, p=.037) and loss aversion (B=2.978, p=.002) were significant positive predictors. The negative-binomial sensitivity analysis produced consistent positive associations for anchoring bias (IRR=1.345) and loss aversion (IRR=1.503). Gender was associated with victimization burden, with males reporting higher mean index scores, whereas categorical differences in the cognitive-bias measures were generally non-significant. The findings support a qualified association between selected cognitive biases and digital-fraud victimization. Implications are discussed for psychologically informed customer education, risk communication and fraud-prevention design.