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August 9, 2026Iconic Research and Engineering Journals

Why Rational Markets Still Produce Irrational Investors: A Behavioral Finance Study of India's Retail Investing Boom

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Authors

VHVarun Gouda T HInstitute of EngineeringSCSoumya Chikkagoudra

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Implication

Examines investor behavior results in inefficient pricing in India's retail investing boom, suggesting cognitive biases play a significant role.

Key Points

  • This article explores the disconnect between theoretical market efficiency and the behavior of real investors, particularly during market anomalies.
  • Theoretical survey of market efficiency and behavioral finance literature.
  • Examination of cognitive biases affecting investor decisions.
  • Analysis of case examples illustrating herding and mispricing effects.
  • Identifies key cognitive biases such as overconfidence and confirmation bias that contribute to irrational investing.
  • Demonstrates how correlated errors among investors lead to prolonged price deviations from fundamental values.
  • Argues for a reconceptualization of market efficiency as a dynamic process influenced by investor psychology.

Cite This Study

H et al. (2026) studied this question.

synapsesocial.com/papers/6a782d182e1896536c83fd46https://doi.org/10.64388/irev10i2-1720312
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Also Consider

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  4. 4RECALIBRATING RATIONALITY: A MULTIDIMENSIONAL ANALYSIS OF BEHAVIORAL BIASES, HERD MENTALITY, AND MARKET ANOMALIES IN POST-PANDEMIC EQUITY AND CREDIT MARKETS2026
  5. 5Existence of Herding Behaviour in the Indian Stock Market2025