Cognitive Biases and Emotional Triggers: Behavioural Insights into Investment Decision-making

Arbaaz Khan, Mohd Sarwar Rahman and Rayees Afzal Mir
Additional contact information
Arbaaz Khan: Glocal School of Business and Commerce, Glocal University, Uttar Pradesh, India.
Mohd Sarwar Rahman: Glocal School of Business and Commerce, Glocal University, Uttar Pradesh, India.
Rayees Afzal Mir: Glocal School of Business and Commerce, Glocal University, Uttar Pradesh, India.

Post-Print from HAL

Abstract: Behavioral finance integrates psychological insights into the ways the financial business venture is granted and combines them to challenge the Efficient Market Hypothesis (EMH) as well as market anomalies as shown in the occurrences of bubbles, crashes, and mispricing. This study examines the effects of cognitive biases such as overconfidence, loss aversion, and herding, and emotional triggers of fear and greed, on investment behavior. Data from 500 participants using a mixed method approach of surveys, interviews, and statistical analysis show that overconfidence is associated with excessive trading and insufficient diversification, while loss aversion and herding contribute significantly to market dynamics. These biases are exacerbated by emotional triggers that feedback upon themselves to keep irrational behaviors happening and market instability. Our findings highlight the need for behavioral insight into risk management frameworks and regulatory policies. This research adds to the growing literature by showing how biases and emotions affect the system and how education, technological interventions, and policy reforms can help foster informed decision-making and market efficiency.

Date: 2025-05-26
References: Add references at CitEc
Citations:

Published in Journal of Global Economics, Management and Business Research, 2025, 17 (2), pp.37-47. ⟨10.56557/jgembr/2025/v17i29361⟩

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05085988

DOI: 10.56557/jgembr/2025/v17i29361

Access Statistics for this paper

More papers in Post-Print from HAL
Bibliographic data for series maintained by CCSD ().