A Comprehensive Analysis of the Behavioural Factors Influencing Stock Market Investing
Keywords:
No Keywords.Abstract
To engage in stock market investment, one must navigate a complex environment that encompasses several aspects such as financial analysis, economic data, and market mood. However, a sometimes-overlooked aspect that plays a crucial role in influencing investment choices is the field of human psychology. The topic of behavioural finance examines the impact of cognitive biases and behavioural tendencies on investors' behaviours, which in turn affects market dynamics. This academic analysis examines eleven prominent behavioural factors, ranging from cognitive dissonance to endowment bias, to clarify how they emerge in investment choices and the resulting impact on stock market performance. By being aware of and recognising these biases, investors can take proactive steps to reduce their influence, thereby creating an environment that promotes making wellinformed and logical investing choices that match with long-term financial goals.
Downloads
Downloads
Published
How to Cite
Issue
Section
References
Abreu, R., & Mendes, V. (2023). Investor sentiment and stock returns: Evidence from social media platforms. Journal of Behavioral Finance, 24(1), 45-67. DOI: 10.1080/15427560.2022.2113715
Ariely, D., Loewenstein, G., &Prelec, D. (2003). “Coherent arbitrariness”: Stable demand curves without stable preferences. The Quarterly Journal of Economics, 118(1), 73-106.
Jones, E. (2019). Cognitive dissonance theory: A brief review and update. Current Opinion in Psychology, 29, 106-110.
Kahneman, D., & Tversky, A. (1972). Subjective probability: A judgment of representativeness. Cognitive Psychology, 3(3), 430-454.
Kahneman, D., & Tversky, A. (1973). On the psychology of prediction. Psychological Review, 80(4), 237-251.
Kahneman, D., & Tversky, A. (1979). Prospect theory: An analysis of decision under risk. Econometrica, 47(2), 263-291. DOI: 10.2307/1914185
Langer, E. J. (1975). The illusion of control. Journal of Personality and Social Psychology, 32(2), 311-328.
Presson, P. K., & Benassi, V. A. (2003). Illusions of control: A meta-analytic review. Journal of Social Behavior and Personality, 15(2), 197-215.
Shefrin, H., & Statman, M. (1985). The disposition to sell winners too early and ride losers too long: Theory and evidence. The Journal of Finance, 40(3), 777-790. DOI: 10.1111/j.1540-6261.1985.tb05002.x
Shiller, R. J. (1989). Market volatility and investor behavior. American Economic Review, 79(5), 229-234.
Tam, S. C. (2023). The impact of retail investor sentiment on stock prices during the COVID-19 pandemic. Finance Research Letters, 41, 101989. DOI: 10.1016/j.frl.2021.101989
Thaler, R. H. (1985). Mental accounting and consumer choice. Marketing Science, 4(3), 199-214.
Thaler, R. H., & Shefrin, H. M. (1981). An economic theory of self-control. Journal of Political Economy, 89(2), 392-406.
Tversky, A., & Kahneman, D. (1981). The framing of decisions and the psychology of choice. Science, 211(4481), 453-458.
Free Sample
Editorial Policy
