Unlocking the Mind of

Finance
Understanding the psychological a spects of finance is crucial for investor
behavior, risk management, and financial product design.
The Intersection of Psychology and
Financial Decision Making
1 Investor Behaviour
Psychology shapes investor behavior, influencing financial markets.

2 Risk Management
Understanding psychological factors helps assess and manage risk.

3 Investment Advice
Psychological aspects aid in providing effective guidance to clients.
Behavioural Finance
Traditional Finance
Theories
Assumptions overlook
psychological factors
influencing decision-making.
Emergence of Psychological Biases
Behavioural Finance
Behavioural finance identifies
Challenges traditional
various psychological biases
assumptions by integrating
influencing financial
insights from psychology.
decisions.
Investor Psychology
1 Overconfidence 2 Herding 3 Loss Aversion
Bias Behaviour
Impacts trading Influences market Affects risk perception
decisions and portfolio trends and volatility. and investment choices.
performance.
Market Inefficiencies and
Anomalies
Efficient Market Hypothesis
Limitations and psychological factors contributing to market anomalies.

Psychological Factors
Cognitive biases, heuristics, and emotional influences contributing to market
inefficiencies.

Examples of Market Anomalies

Calendar effects, momentum effect, and post-earnings announcement drift.

Emotional Influences on Financial
Decisions
Fear and Greed Role of Emotions
Driving forces in market trends and risk Influencing risk perception and mood
perception. analysis in financial markets.
Behavioural Portfolio Theory
Traditional Portfolio Theory Assumptions and incorporating psychological
factors.

Psychological Factors Loss aversion, overconfidence, herding

behavior, and mental accounting.
Applications and Implications

Financial Financial Regulatory Ethical

Literacy Products Implications Considerations
Improving financial Designing better Addressing Exploring ethical
education and financial products and psychological factors boundaries in
investor literacy. services. in regulations and leveraging
investor protection. psychological insights.
 Submitted by:
Himanshu Bhanarkar (SM23DMC022)
Swabhiman Majhi (SM23DMC053)
Vansh Singhania( SM23DMC057)
Vansh Bhalotia (SM23DMC056)
Naman Rathi (SM23DMC030)
Khushi Jain (SM23DMC027)
Sonali Singh (SM23DMC68)
Khushboo (SM23DMC26)