Investigating the Impact of Behavioral Biases on Investment Decision-Making A Comparison between Behavioral Finance and Traditional Finance Perspectives write about overview of behavioral finance

  • Unique Paper ID: 160093
  • Volume: 9
  • Issue: 12
  • PageNo: 1152-1156
  • Abstract:
  • This study compares behavioral finance with traditional finance viewpoints on behavioral biases and investment decision-making. Traditional finance emphasizes rational market-based decision-making, while behavioral finance examines how psychological biases affect investment behavior. The study examines how loss aversion, overconfidence, and herding behavior affect investing decisions from both sides. A thorough literature study illuminates behavioral and traditional finance ideas and findings. Quantitative analysis of historical financial data investigates biases and investment performance, including risk-adjusted returns, diversification, and market timing. Qualitative interviews or surveys obtain investor opinions on risk and decision-making. The comparative analysis shows how biases affect investment decision-making from the two perspectives. Common biases, their effects on investing performance, and behavioral finance vs. standard finance tactics are predicted results. Investors, financial advisors, and regulators can enhance decision-making using the findings. This study adds to behavioral finance and traditional finance literature by revealing how biases affect investment outcomes.

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