Market Behavior and the Psychology of Individuals Finance Essay
It adds psychology, sociology and neuroscience to the mix to better explain perceived irrational financial behavior and market outcomes. Psychological biases in behavioral finance. Extensive research by behavioral economists and financial psychologists has uncovered cognitive and emotional biases that influence managerial behavior. Readers see it firsthand. Omar: Behavioral Finance proposes psychology-based theories to explain stock market anomalies, for example dramatic increases or decreases in stock price, and to identify and understand why people do certain things. Behavioral finance is a new topic in the financial field and is very popular in stock markets around the world for investment decisions. However, this topic is still in its infancy in India. Behavioral Finance is a newly developed sub-discipline of Behavioral Economics. The main purpose. of Behavioral Finance is to understand how people make their investment decision and how they do it. to behave. It aims to clarify how our mental frameworks and emotional responses play a crucial role in shaping our financial health. The story unfolds in three main parts. The first part delves deeper into the psychological theories and frameworks that underlie our financial behavior, using behavioral economics and psychology. For the first time in 1951, Burrell combined psychology and finance to research financial decision making, and is considered the pioneer of behavioral finance. The most important psychological. A number of financial scholars and practitioners have argued that stock markets are not efficient, that is, they do not necessarily reflect economic fundamentals. from this point of view, significant and persistent deviations from the intrinsic value of a company's share price occur in market valuations. The argument is more than. Certain technical indicators are used by market participants to better understand market psychology and behavior. This is because price and volume actions can be viewed as a history of changes. The approaches that explain consumer behavior are divided into the three groups Valaskova et al. 2015: psychological based on the relationship between the psyche and behavior of the consumer sociological approach, which is devoted to the reactions of consumers in different situations or how the behavior is influenced through various social media. It has been years since Eugene Fama's article “Random Walks in Stock Market Price” b appeared in the pages of the Financial Analysts Journal Journal. The profound impact of his work is still palpable. Until that publication, making money on Wall Street was considered easy. By studying psychological factors that influence investor behavior, behavioral finance provides a more comprehensive understanding of financial markets and insights into market anomalies..