Authors:

Himani Chavan, Divya Kale, Aashish Kewalramani

Abstract:

This paper studies the attitude of individuals towards their monetary highly cognitive process. Variety of a number of people has started investing in recent years. While the majority of these investment decisions are backed by research and logic, there are some decisions which we take solely based on our mood at that point or our instinct. These decisions which are taken without any logic or research can help us understand what behavioral finance really is.

Behavioral finance studies about how psychological biases play a vital part in influencing the financial behavior of investors, in simple words, it is an amalgamation of finance and psychology. One of the biases which impact an investor’s decision is confirmation bias. In this, the investor only reads what confirms his/her belief and disregard information which contradicts it. Another common bias which has an impact on an investor’s decision is herd mentality. In this, investors tend to ignore their own analysis and blindly follow what other investors are doing. Example, Zomato this year, released its Initial Public Offering (IPO) in July. Though there might have been people who analyzed before buying, most people bought their IPO for the sole reason of the buzz it created.

Hence, it becomes imperative that an investor know about these things as it would help the investor make an informed financial decision devoid of any bias.

Keywords:

Finance Behavior, Psychology, finance

Vol & Issue:

VOL.14, ISSUE No.Special Issue 1, january 2022