Advances in Economics, Management and Political Sciences
- The Open Access Proceedings Series for Conferences
Proceedings of the 2nd International Conference on Financial Technology and Business Analysis
Series Vol. 54 , 01 December 2023
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Expressions of Irrational Investment Behaviour and Proposals to Reduce the Irrational Behaviour
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Abstract
Behaviour finance gained more and more weight in the development of finance theory in comparison to standard finance theory which is dominated by the efficient market hypothesis. As a field of behavioural economics, it combines psychology and finance to understand how human behaviour and cognitive biases impact financial decision-making. Some market anomalies which seem strange or impossible according to standard finance theory can be understood and explained with the help of behavioural finance theory. Through analysis and literature review, this paper explores the common expressions of irrational behaviour such as representativeness, herd effect, anchoring, overconfidence, and their effect on the investment financial market. This paper finds that people can be easily influenced by any given information. Individuals’ personalities and social backgrounds also play a decisive role in making investment decisions. Therefore, some possibilities and advice to reduce the losses caused by human cognitive biases are also provided in the paper.
Keywords
behaviour finance, representativeness, herding, disposition effect, loss aversion
References
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Data Availability
The datasets used and/or analyzed during the current study will be available from the authors upon reasonable request.
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- Volume Title
- Proceedings of the 2nd International Conference on Financial Technology and Business Analysis
- ISBN (Print)
- 978-1-83558-155-1
- ISBN (Online)
- 978-1-83558-156-8
- Published Date
- 01 December 2023
- Series
- Advances in Economics, Management and Political Sciences
- ISSN (Print)
- 2754-1169
- ISSN (Online)
- 2754-1177
- DOI
- 10.54254/2754-1169/54/20230872
- Copyright
- 01 December 2023
- Open Access
- This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited