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Behavioural finance questions the long-held belief in market rationality by investigating the impact of human psychology on financial decision-making. This study delves into the foundational ideas of behavioural finance, illuminating the ways in which emotions, cognitive biases, and shortcuts influence the actions of investors. It draws attention to the substantial impacts of these irrationalities on monetary choices by examining them. The research delves into certain biases including herding, anchoring, overconfidence, and loss aversion that impact investing decisions. Market inefficiencies caused by these biases may impact asset values and cast doubt on the long-held assumption that markets are inherently efficient. This study delves at the ways in which fear and greed influence financial decisions. Investors impulsive actions, fuelled by these emotions, have the potential to cause market fluctuations. Investors may improve their risk management and strategy development by understanding the psychological aspects that play a role in decision-making. The need of comprehending behavioural finance for different parties is emphasized in the article. To counteract the detrimental impacts of cognitive and emotional biases in financial decisions, it emphasizes the need of raising awareness and providing education. These initiatives may aid lawmakers, financial advisers, and investors in making better decisions in the financial markets by encouraging educated and reasonable decision-making.
Goud et al. (2024) studied this question.