Investment Behaviour and Biases of Investor: An Analytical Review of Bihar

Abstract

In recent times, capital markets are attracting the attention of retail investors across the globe and
this number is increasing due to diversified reasons like declining interest rates, insecurity and
volatility amongst fixed income securities, increasing awareness about investment options, trading
through the proper means, increasing role of technology in capital markets and their tech savvy
investors etc. However, to understand this whole process, behavioural finance acts as a catalyst and
helps us as a medium both for reasons and causes for those reasons. Behavioural finance refers to the
psychology of finance and people dealing in finance. This subject contributes and affects finance in
multiple ways as it evaluates human desire and the motivating factors of desire in making investment,
there by contributing to value maximization of investments made. It is an interdisciplinary subject
with flavours of psychology, economics and sociology. The purpose of this paper is to develop a
conceptual understanding and presenting a framework in the field of behavior finance & biases. The

paper has drawn outline of theory as well as practical implication in the field i.e. financial decision-
making process and the factors affecting the behavior.

Keywords: Behavior finance, Behavior biases, investment, Efficient market hypothesis, Financial
decision making process, Prospect theory