A Study on Behavioural Finance Psychology in Investment Decisions of Investors

Abstract

This research paper delves into the realm of behavioral finance psychology and its profound implications for investment decision-making. Drawing upon a quantitative research methodology, the study examines the influence of psychological biases, emotional factors, and cognitive processes on individuals' investment behaviors. A comprehensive survey was conducted among a diverse sample of 186 investors, yielding valuable insights into their tendencies and preferences. The findings underscore the significant impact of psychological biases on investment decisions. Participants exhibited a tendency to rely on past experiences, be influenced by peers, and face challenges in deviating from initial opinions. Emotional factors emerged as key drivers, shaping choices and contributing to risk preferences. Moreover, the study highlights the prevalence of loss aversion and status quo bias, shedding light on the cognitive underpinnings of investment behaviors. Additionally, the influence of media framing and the role of presentation in investment decisions were evident, emphasizing the relevance of behavioral cues in shaping perceptions. These insights carry important implications for investors, practitioners, and policymakers. Increased awareness of these biases and tendencies can empower investors to make more informed decisions. Practitioners can tailor financial advice to better align with investors' cognitive processes and emotional responses.  Policymakers can design educational programs that address behavioral biases and promote rational decision-making. The study suggests avenues for future research, including longitudinal studies and interventions to mitigate biases.

Keywords: behavioral finance, psychological biases, investment decision-making, emotional factors, cognitive processes, loss aversion, status quo bias, media framing, investor education, quantitative research.