behavior finance

Behavioral finance studies how psychological factors and emotions influence investors' decisions and market outcomes. Unlike traditional finance, which assumes people are always rational and self-interested, behavioral finance recognizes that biases, emotions, and social influences often lead to irrational behaviors—like panic selling or overconfidence—that can impact financial markets. By understanding these tendencies, investors and professionals can make more informed choices, anticipate market anomalies, and develop strategies that account for human nature, ultimately leading to better financial outcomes.