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Behavioral Finance and Investment Decisions

Authors:

Ayushman Dubey

Abstract: Behavioral finance is a field that integrates psychology and economics to explain the irrational behavior of investors in financial markets. Unlike traditional finance, which assumes that individuals are rational and markets are efficient, behavioral finance recognizes that cognitive biases and emotional responses significantly influence investment decisions. This paper explores key behavioral finance theories, common investor biases, and their impact on investment decisions. The paper also presents case studies and strategies to mitigate such biases for better financial decision-making.