Authors :
Pooja Parkash; Ravi Parkash
Volume/Issue :
Volume 9 - 2024, Issue 2 - February
Google Scholar :
http://tinyurl.com/ux385tm5
Scribd :
http://tinyurl.com/6ppd9fw4
DOI :
https://doi.org/10.5281/zenodo.10715718
Abstract :
The realm of investment is not merely a terrain of rational analysis and logical deductions; rather,
it's a complex interplay of psychological biases that often steer investor decision-making processes. This
abstract delves into the intricate web of behavioral biases that permeate the investment landscape,
shedding light on their profound impact on investor behavior and market dynamics. Drawing from a
diverse array of behavioral economics literature and empirical studies, this abstract synthesizes the
prevalent biases that plague investor decision-making, ranging from overconfidence and confirmation
bias to loss aversion and herd mentality. It elucidates how these biases manifest in various stages of the
investment process, influencing asset allocation, portfolio diversification, and risk management strategies.
Moreover, the implications of behavioral biases on market efficiency and asset pricing, highlighting the
divergence between rational expectations and actual market outcomes. By dissecting the underlying
mechanisms of these biases and their consequences, it underscores the importance of recognizing and
mitigating their effects for both individual investors and financial institutions. It also discusses the
potential synergies between traditional finance theories and behavioral economics, proposing integrated
approaches that harness the strengths of both disciplines to enhance investor decision-making.At the end
this topic gives us a holistic understanding of behavioral biases in the investment domain, emphasizing
the need for investor education, regulatory measures, and technological innovations to foster more
rational and informed decision-making processes. By unraveling the intricate interplay between
psychology and finance, these abstract paves the way for a more nuanced comprehension of investor
behavior and its ramifications on market dynamics.
Keywords :
Behavioral Finance, Investment Decision, Availability, Regret Aversion, Representativeness, Anchoring.
The realm of investment is not merely a terrain of rational analysis and logical deductions; rather,
it's a complex interplay of psychological biases that often steer investor decision-making processes. This
abstract delves into the intricate web of behavioral biases that permeate the investment landscape,
shedding light on their profound impact on investor behavior and market dynamics. Drawing from a
diverse array of behavioral economics literature and empirical studies, this abstract synthesizes the
prevalent biases that plague investor decision-making, ranging from overconfidence and confirmation
bias to loss aversion and herd mentality. It elucidates how these biases manifest in various stages of the
investment process, influencing asset allocation, portfolio diversification, and risk management strategies.
Moreover, the implications of behavioral biases on market efficiency and asset pricing, highlighting the
divergence between rational expectations and actual market outcomes. By dissecting the underlying
mechanisms of these biases and their consequences, it underscores the importance of recognizing and
mitigating their effects for both individual investors and financial institutions. It also discusses the
potential synergies between traditional finance theories and behavioral economics, proposing integrated
approaches that harness the strengths of both disciplines to enhance investor decision-making.At the end
this topic gives us a holistic understanding of behavioral biases in the investment domain, emphasizing
the need for investor education, regulatory measures, and technological innovations to foster more
rational and informed decision-making processes. By unraveling the intricate interplay between
psychology and finance, these abstract paves the way for a more nuanced comprehension of investor
behavior and its ramifications on market dynamics.
Keywords :
Behavioral Finance, Investment Decision, Availability, Regret Aversion, Representativeness, Anchoring.
