Behavioral finance is a field of study that explores the impact of psychological, emotional, and social factors on financial decision-making. It seeks to understand why individuals deviate from rational decision-making and how these biases affect markets. Behavioral finance theories suggest that people often make irrational financial decisions due to cognitive biases such as overconfidence, anchoring, and framing effects. These biases can lead to suboptimal investment decisions, market inefficiencies, and mispricing of assets. Behavioral finance has important implications for investors, as it highlights the importance of managing emotions and avoiding common biases in investment decision-making.

Behavioural finance is a field that studies how psychological factors influence financial decisions. It explains why investors often act irrationally, even when they have access to relevant information. Emotions like fear, greed, and overconfidence can lead to poor choices, such as panic selling or excessive risk-taking. Behavioural finance also examines common biases, including herd behaviour, where people follow others, and loss aversion, where losses feel more painful than gains feel rewarding. These patterns can affect market trends and create price inefficiencies. By understanding behavioural finance, investors can recognise their own biases and make more rational decisions. It helps improve discipline, risk management, and overall investment performance by encouraging a more balanced and logical approach to financial decision-making.