CONTRIBUTION OF BEHAVIORAL FINANCE IN INVESTMENT DECISIONS-AN ARTICLE
Keywords:BEHAVIORAL FINANCE, INVESTMENT DECISIONS, CONTEXTUAL AND COMPLEX PROCESS
Decision making is a contextual and complex process that involves thorough analysis of problem variables to select an alternative course of action. An investment decision is not an exception. Experiential learning is challenging the assumption of investor rationality, taken by traditional theorist since long. There are a large number of studies in financial research that have recognized the role of psychological element in financial decision making and led to the emergence of a new area of research called ‘Behavioural Finance’. The stream takes the discipline of economics and psychology to explain the reasons behind investor irrationality. The proponents of behavioral finance believe that the effectiveness of investment strategies can be enhanced by incorporating psychological factors in investment decisions.