According to the general phenomena and classical economic theory all the human being are rational while taking important decision that could enhance the expected result. Meanwhile, ground reality is completely different as in real life it has been observed that human being are not that rational while taking important decision as they are being influenced by several known and unknown behavioral factors. Thus, in modern era, the concept of behavioral finance is gaining extreme important, however, researcher are still striving to find out that whether the impact of behavioral finance on decision making is uniform for all individual or personal psychographic and demographic aspects also has certain influence on decision making.
Among several researchers (Jaiswal & Kamil, 2012) has conducted an extensive research on this emerging topic with the primary objective of identifying the role played by gender investment decision making and the degree at which behavioral finance influence individual while taking important decisions. In addition to this, researcher through this report also intent to identify the differences in two genders while taking important decision under similar behavioral circumstances.
During the quest of the accomplishment of the research, objectives researcher has provided detailed illustration of the concept “behavioral finance which is a field that primarily addresses to the combine behavioral and cognitive psychology and theory which relates to the conventional economics and finance (Moore & Healy, 2008). This helps in providing basis why investors primarily make uninformed and irrational decisions. The behavioral finance primarily deals with the concepts mentioned below.
Anchoring (The concept of anchoring is primarily the tendency found in investors whichattaches the anchor thoughts to a particular reference point. The anchor thoughts are attached even though they may not be related to the decision being taken at the spot)
Mental Accounting (The concept of mental accounting in finance refers to the inclination of people towards separating their accounts, which is primarily based on thesubjective criterion. It may include the sources of money and the purpose of keeping the account)
Confirmation Bias (When investing, investor primarily seeks that information which is according to the thoughts of the investor and supports him or her in the investmentdecision)
Hindsight Bias (Hindsight bias is another bias where investor believes that the eventhappened today has been inevitable and well predicted)
Gambler's Fallacy (In the gamblers fallacy an individually by mistake start believing that and event will less likely to occur following a series of events which mean thatevent will not occur)
Over confidence (Over Confidence is over exaggerating the ability of one while performing in a certain event)
Over-reaction (Over reaction is an emotional response which occurs when an a individualreacts to certain situations which may affect the investment of an individual positively or negatively)
Herd Behavior (Herd behavior is when an individual's start following the trails of the masses. By masses, it means other investors that may lead to irrational as well as rational decision making. An individual follows the trail of people in which he does not use his own thought ...