A Study of Investor Decision-Making Behavior Based on Behavioral Finance

Zhongzhe Sun ()
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Zhongzhe Sun: Xi’an Jiaotong-Liverpool University, School of Mathematics and Physics

A chapter in Proceedings of the 2025 3rd International Academic Conference on Management Innovation and Economic Development (MIED 2025), 2025, pp 241-248 from Springer

Abstract: Abstract This article endeavors to provide an in-depth exploration of the intricate factors influencing investor decision-making behavior, with a particular emphasis on cognitive biases, emotional heuristics, and social influences through the lens of behavioral finance. Synthesizing research from various scholars, this study elaborates on how investment decisions under these factors impact individual portfolio performance and the efficiency of financial markets. Specifically, the analysis examines how behavioral biases can lead to suboptimal decisions by individual investors, such as excessive trading and momentum investing. Furthermore, it investigates the macroeconomic implications of these biases, including their effects on market volatility and the formation of market bubbles. The findings of this research aim to enhance investors’ understanding of the limitations inherent in their decision-making processes, thereby facilitating more informed investment strategies. In addition, this paper provides a theoretical framework for financial regulators to inform the development of policies that maintain market stability and protect investor interests.

Keywords: Behavioral Finance; Cognitive Biases; Emotional Biases; Investment Decision (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:spr:advbcp:978-94-6463-835-6_26

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DOI: 10.2991/978-94-6463-835-6_26

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