An Examination of the Impact of Psychological Biases on Investment Decision-Making: A Behavioral Finance Study of Employees

Abstract

This study explores the domain of behavioral finance by analysing the financial decision-making patterns of employees in Pune Maharashra, India. Building on Daniel Kahneman’s perspective that intuitive judgment can often be misleading, the research examines the role of psychological biases and emotional factors in shaping investment decisions. The analysis reveals the widespread presence of cognitive biases, including herd behaviour and emotional influences, in financial choices. Cultural influences are found to play a significant role in the decision-making processes of students, while employees demonstrate increased concern regarding job security when making investment decisions. The findings emphasize the need for targeted financial education initiatives to equip individuals with the knowledge required to make informed investment choices. By highlighting the behavioral dimensions of financial decision-making, this study contributes to a deeper understanding of market behaviour and supports the development of more effective financial models.