Behavioral Biases and Financial Decisions: A Systematic Review and Bibliometric Analysis of the Transition from Classical Theory to Behavioral Finance

Biais comportementaux et décisions financières: une revue systématique et une analyse bibliométrique de la transition de la théorie classique vers la finance comportementale

Chaimaa Laamime and Karima Mialed
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Chaimaa Laamime: Université Hassan II de Casablanca, ENCG Casablanca, Ain Sebaâ
Karima Mialed: Université Hassan II de Casablanca, ENCG Casablanca, Ain Sebaâ

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Abstract: This paper examines the conceptual evolution of financial decision-making models, highlighting the transition from traditional economic theories to the behavioural perspective. Foundational frameworks such as the Efficient Market Hypothesis (EMH) and Modern Portfolio Theory (MPT) are built on assumptions of perfect rationality and information symmetry in markets. However, these models fall short in accounting for the erratic and often illogical decisions observed among investors.As a response to these theoretical shortcomings, behavioural finance has gained prominence by integrating psychological dimensions into the analysis of financial actions. This work conducts a systematic review of recent academic contributions focused on behavioural biases that influence individual financial behaviour, asset pricing mechanisms, and investment outcomes.The study identifies a notable academic shift—from macro-level theories of market functioning to a growing focus on micro-level investor cognition. This shift is also reflected in the increasing volume of research investigating how mental shortcuts and emotional reactions shape financial choices.The findings suggest that incorporating behavioural insights is essential for designing more effective investment strategies and risk assessment tools. Furthermore, this approach offers a promising path toward understanding persistent market anomalies and contributes to the development of a more realistic theory of investor behaviour.

Keywords: behavioural biases; financial rationality; investor personality; classical financial theories; investment decision-making; Behavioural finance; rationalité en finance; personnalité de l'investisseur; théories classiques de la finance; biais comportementaux; prise de décision en investissement; Finance comportementale (search for similar items in EconPapers)
Date: 2025-08-27
New Economics Papers: this item is included in nep-hpe
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Published in International Journal of Accounting, Finance, Auditing, Management and Economics, inPress

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