A Study on Behavioural Finance

Abstract

This research paper delves into the intriguing field of behavioral finance, exploring how psychological factors influence financial decision-making processes. Behavioral finance seeks to understand why people make irrational financial decisions despite being aware of the consequences. It bridges the gap between economics and psychology, offering insights into human behavior that traditional finance models often overlook. The study examines various aspects of behavioral finance, including cognitive biases, market anomalies, and investor behavior under different market conditions. Through a comprehensive review of existing literature and empirical studies, this paper aims to shed light on the complex interplay between human emotions, cognitive limitations, and financial markets. The findings contribute to a deeper understanding of investor behavior, potentially informing strategies for financial advisors and investors alike. This research underscores the importance of incorporating psychological principles into financial analysis, highlighting the potential for improved investment outcomes through a more nuanced understanding of human behavior.