GOAL

REPORT

BEHAVIOURAL FINANCE
UNDERSTANDING INVESTORS’ DECISION-
MAKING BIASES

ARUSHI VERMA
502204032
INTRODUCTION
Behavioral finance is a burgeoning field within the realm of
finance that investigates how psychological factors influence
financial decision-making. This research project aims to
delve into the intricate dynamics of investor decision-
making biases, shedding light on their implications for
financial markets and investment strategies.

MOTIVATION
The motivation behind this
research stems from the
recognition that traditional
finance theories often assume
rationality in investor
behavior, which does not
always align with real-world
observations. Understanding
the nuances of behavioral
biases can provide valuable
insights for investors,
financial practitioners, and
policymakers to make
informed decisions and
mitigate potential risks in
financial markets.
 Research
1. To identify and classify common
behavioral biases prevalent in
investor decision-making.

Objectives 2. To analyze the impact of these

biases on asset pricing and
market efficiency.

3. To explore the role of cognitive

psychology in shaping investor
behavior.

4. To examine strategies for

mitigating the effects of
behavioral biases on investment
outcomes.

Research Methodology
This research project will adopt a mixed-method approach, combining
qualitative and quantitative techniques to achieve comprehensive insights
into the phenomenon of behavioral biases in finance. Qualitative methods
such as literature review and case studies will be utilized to identify and
understand various biases. Quantitative analysis will involve data analysis
to quantify the effects of these biases on investment performance.

Tasks to be Completed
1. Review relevant literature on behavioral finance and investor decision-
making biases.

2. Identify and categorize key behavioral biases prevalent in financial

markets.

3. Collect and analyze empirical data to assess the impact of biases on

investment outcomes.

4. Develop strategies to mitigate the influence of biases on decision-

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 making processes.
5. Present findings and recommendations in a comprehensive research
report.

Plan for Completion

1. Literature review and conceptual framework development

2. Data collection and analysis

3. Development of mitigation strategies and simulations

4. Report writing and presentation preparation

Expected Research Implications and

Contribution to Literature
This research project is expected to contribute significantly to the existing
body of literature in behavioral finance by providing a comprehensive
analysis of investor decision-making biases and their implications for
financial markets. The findings of this study will not only enhance our
understanding of human behavior in finance but also offer practical insights
for investors, financial professionals, and policymakers to navigate volatile
market conditions effectively. Moreover, the development of effective
mitigation strategies can potentially improve investment outcomes and
contribute to the advancement of behavioral finance theory and practice.

In conclusion, this research project endeavors to bridge the gap between

theory and practice in finance by elucidating the intricate interplay between
human psychology and financial decision-making, thereby paving the way
for more informed and rational investment strategies in the dynamic
landscape of global markets.

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THANK
YOU