Importance of Behavioural Finance in Investment Decision-Making

Ing. Donald Jacob Koothodil

Master's thesis

Abstract:

This thesis aims to evaluate the influence of behavioural biases on individual investment decisions in the capital market, with a focus on investors under a selected firm. The research will investigate several behavioural factors such as the disposition effect, endowment effect, mental accounting, and overconfidence, and how they impact investment decisions. The research aims to give investors in the capital market a better understanding of these biases and how to improve their wealth management decisions. The data collection method will be through primary sources, with a specific focus on Indian investors. The study will aim to identify the correlation between awareness of behavioural factors and their impact on wealth management. The research will propose recommendations in the field of investment decision-making. Overall, the study aims to contribute to the existing literature on behavioural finance and investment decision-making by providing insights into the impact of behavioural biases on individual investment decisions.

Abstract:

This thesis aims to evaluate the influence of behavioural biases on individual investment decisions in the capital market, with a focus on investors under a selected firm. The research will investigate several behavioural factors such as the disposition effect, endowment effect, mental accounting, and overconfidence, and how they impact investment decisions. The research aims to give investors in the capital market a better understanding of these biases and how to improve their wealth management decisions. The data collection method will be through primary sources, with a specific focus on Indian investors. The study will aim to identify the correlation between awareness of behavioural factors and their impact on wealth management. The research will propose recommendations in the field of investment decision-making. Overall, the study aims to contribute to the existing literature on behavioural finance and investment decision-making by providing insights into the impact of behavioural biases on individual investment decisions.

Keywords

investment decision-making, behavioral factors

Language used: English

Date on which the thesis was submitted / produced: 18. 12. 2023

Thesis defence

• Date of defence: 13. 2. 2024
• Supervisor: Ing. Žaneta Rylková, Ph.D.
• Reader: doc. Ing. Petra Růčková, Ph.D.

Silesian University in Opava

School of Business Administration in Karvina

Master programme / field:
Economics and Management / Business Economics and Management