Financial Behavior and Psychological Biases: A Comprehensive Study of the Core Factors

Abstract

With regards to complex monetary  relationships, Investment choices, uncertainty/risks, and the  repeating financial emergencies, psychological variables  have become progressively significant in Investment  decision making. Exploration on the investment behavior of  various scholars at various times and place, this generally  acknowledged interdisciplinary financial field: Behavioral  Finance. To understand and explain psychological decision  making and investment behavior, it is necessary to study the  behavioral factors that affect individual’s mentality. Many  researchers have researched the aspects which determine the  financial behaviour and their effect on economic judgment,  notably with cognitive bias. Traders are frequently not  conscious of their biases & preconceptions. If traders are  informed of the biases they may confront, they may behave  more logically. This mentality can improve the quality of  your decision-making. The work aims to help policymakers  and investors understand psychological deviations so that people can make better judgments when buying and lower  the likelihood of behavior aberrations, since the  repercussions of individual mistakes are eventually mirrored  on the macro scale, generating stability and Financial and  economic crises.