Impact of Behavioural Finance on Investment Decisions of Individuals

Abstract

This study focuses on how the investors decision can be impacted by the various biases . The biases consist of the psychological, emotional and other factors. Behavioural finance theory tells that pricing of the stock can be influenced by these psychological and emotional factors. It shows how the psychology influences the financial decision maker to act and which further results in effecting the market. It says that investors are often prone to bias and are not always rational. Decision making is not only about the specific problem and how to face it, it also considers the individuals performance.  In order to analyse these a google form is floated and 100 responses were collected which were used for further analysis. The results showed that herding, loss aversion, overconfidence led to the faulty investment decisions. Understanding these areas make one capable of making sound financial decisions.