Behavioural Biases in Financial Investments: A Comprehensive Literature Review

Sadhna Bagchi, Lalit Prasad and Mukesh Shrivastava
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Sadhna Bagchi: AAFT University of Media and Arts, Raipur, Chhattisgarh
Lalit Prasad: Management Studies, Pune, Maharashtra
Mukesh Shrivastava: Wells Fargo International Solutions Pvt Limited, Hyderabad, Telangana

Acta Universitatis Bohemiae Meridionalis, 2024, vol. 27, issue 3, 81-93

Abstract: This study uses a systematic assessment of 1980-2024 literature to examine how behavioural biases affect financial investment decisions. Psychology and emotion influence investor behaviour in behavioural finance, challenging rational decision-making. The study analyses 40 scientific papers from Google Scholar and PubMed using a systematic literature review (SLR) technique and predetermined keywords and inclusion criteria. Cognitive biases like overconfidence and conservatism and emotional biases like loss aversion and regret aversion strongly influence investment decisions. The study also investigates how post-COVID-19 economic trends and generational behaviours, notably among Millennials and Generation Z, have changed investment tactics. Anchoring, mental accounting, herding, and confirmation biases affect market results and individual decision-making. Financial literacy, planning, and technology moderate these biases, according to this review. The study suggests that behavioural psychology is crucial to designing better investment strategies and provides a roadmap for future research on biases and financial decision-making.

Keywords: Behavioural Biases; Cognitive; rational thinking; emotional biases; Risk aversion (search for similar items in EconPapers)
JEL-codes: G11 G41 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:boh:actaub:v:27:y:2024:i:3:p:81-93

DOI: 10.32725/acta.2024.014

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