The Female Investor's Mind: Understanding Psychological Influences in Stock Market Participation

Abstract

Traditional finance theory posits rational behavior by investors within efficient markets, thoroughly considering all available information. However, behavioural finance, rooted in psychology, challenges this assumption, revealing systematic errors and psychological biases that lead to irrational investment decisions. Emphasizing emotions, feelings, and intuition, this field diverges from rationality in decision-making. Human psychology, influenced by perceptual biases, overconfidence, emotions, and heuristics, significantly shapes investment choices. Investors' susceptibility to these phenomena often results in illogical decisions, leading to suboptimal outcomes. Recognizing the profound impact of psychology on investment behavior is crucial for investors and financial practitioners. By understanding and addressing these biases, investors can strive for more informed choices, enhancing their financial well-being in dynamic markets. This acknowledgment of psychological influences offers insights into navigating the complexities of investment decision-making and optimizing financial outcomes.