Decision Making in Financial Markets: A Thematic Review and Discussion

Financial decision making is generally characterized by high degree of risk, uncertainty as well as complexity. Decision making in financial markets takes consideration a stack of factors including personal, technical and situational factors and above all it necessitates an understanding of human in...

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Bibliographic Details
Published in:Journal of Business Strategy Finance and Management 2021-12, Vol.3 (1-2), p.48
Main Authors: Bisati, Azhar Imtiyaz, S.M. Imamul Haque Umer Jon Ganai, Gulzar, Ishfaq
Format: Article
Language:English
Subjects:
Access to information
Behavior
Decision making
Economics
Expected utility
Investment policy
Investments
Rationality
Securities markets
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Summary:Financial decision making is generally characterized by high degree of risk, uncertainty as well as complexity. Decision making in financial markets takes consideration a stack of factors including personal, technical and situational factors and above all it necessitates an understanding of human instinct on the top of financial skills. In the broad arena of literature, research studies have proposed two primary themes of decision making. Rational world presupposes being reasonable in every aspect and making unbiased decisions. Irrationality approach that investor behaviour is driven by emotions even if they are well informed. This research paper by using the relevant literature in the field of behavioural decision making and investor psychology, provides an overview of these two distinctive academic doctrines, which the way-out how in actual world people undertake their decision making. Furthermore, this research paper reviews how behavioural biases can lead to errors in investment decision making.
ISSN:2583-2832
2583-2832
DOI:10.12944/JBSFM.03.01-02.06