Unveiling the Complexities of Behavioral Finance: Understanding Human Decision Making in Financial Markets
Authors:-Preeti Padma Sahu, Aniket Burman
Abstract-Behavioral finance is a subject of finance that studies the impact of psychological factors on how people make financial choices. This study intends to make valuable contributions to the expanding body of research in behavioral finance by exploring the behavioral biases and heuristics that affect investors’ decision making processes. Through a comprehensive review of existing literature, key concepts such as loss aversion, overconfidence, and herding behavior are examined, providing insights into the irrational behavior observed in financial markets. The objective of this research is to empirically analyze the impact of behavioral biases on investment decisions using a mixed methods approach combining qualitative and quantitative analysis. Data is collected through surveys and interviews with investors, supplemented by quantitative analysis of market data. The findings reveal significant correlations between certain behavioral biases and investment outcomes, shedding light on the complexities of human behavior in financial decision making. The conclusions drawn from this study underscore the importance of understanding and mitigating behavioral biases to enhance investment performance and promote financial wellbeing. This research contributes to both theoretical understanding and practical applications in the field of behavioral finance, offering valuable insights for investors, financial practitioners, and policymakers alike.
