Behavioral Aspects of Investment Decisions: Emotions, Biases, and Market Trends

• Author(s): Bolek Aliya Orazbaikyzy
• Paper ID: 1710107
• Page: 1563-1572
• Published Date: 31-08-2025
• Published In: Iconic Research And Engineering Journals
• Publisher: IRE Journals
• e-ISSN: 2456-8880
• Volume/Issue: Volume 9 Issue 2 August-2025

Abstract

This theory of finance disagrees that investors are always logical and that markets are always efficient. This theory instead points out that things like psychology, cognitive biases, and emotions play a key role in making investment choices and in the rise and fall of markets (Kahneman & Tversky, 1979; Thaler, 1985). The paper investigates how fear, overconfidence, loss aversion, and herd behavior impact investors' judgment of risks and financial decisions. Understanding that prospect theory and the adaptive markets hypothesis highlight these behavioral impacts together; the analysis points out that they may create ongoing differences in the market and explain things like market bubbles and crashes (Shiller, 2000; Lo, 2005). Based on combining knowledge from psychology and finance, this study claims that focusing on behavioral drivers supports more reliable investment approaches and effective policy enactments. This hypothesis encourages researchers to look into how biases can differ among cultures and consider the impact of new technologies, like algorithmic trading, on these biases in financial markets (Kirilenko et al., 2017).

Keywords

Behavioural Finance, Investment Decision, Emotions, Cognitive Biases, Market Trends, Investor Psychology, Loss Aversion

Citations

IRE Journals:
Bolek Aliya Orazbaikyzy "Behavioral Aspects of Investment Decisions: Emotions, Biases, and Market Trends" Iconic Research And Engineering Journals Volume 9 Issue 2 2025 Page 1563-1572

IEEE:
Bolek Aliya Orazbaikyzy "Behavioral Aspects of Investment Decisions: Emotions, Biases, and Market Trends" Iconic Research And Engineering Journals, 9(2)