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September 17, 2025EconomicusOpen Access

Behavioral Finance and Investment Decision-making: A Multifaced Analysis of Cognitive Biases, Risk Perception, and Market Dynamics1

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This analysis highlights how cognitive biases influence risk perception and market dynamics in investment decision-making.

Cognitive biases significantly affect investment decisions, leading to market inefficiencies and systemic risks.
Key biases such as overconfidence, anchoring, and herding distort risk perception, contributing to suboptimal choices.
Mixed-methods approach combines empirical case studies with statistical analysis to assess market behavior.
Incorporating behavioral insights into financial models and regulations is essential for enhancing market stability.

M. Paradiso (2025) studied this question.

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