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What is Behavioral Finance and how it affects your Financial decision?

swati11 on Finance

https://blog.finology.in - Behavioral finance is the study of the influence of psychology on the behavior of investors. Read the article to know more on behavioral finance theory and understands behavioral finance vs traditional finance.
Behaviour is all about emotions, personalities, psychology, and sociology. And finance is all about numbers, equations, statistics, and balance sheets. Right? Don't worry; we will explore this in detail together in this one and our upcoming blogs.

The most common assumption of standard finance is that human beings are "rational." This means that humans analyze the pros and cons of any situation and then choose the one which is best for them. But the critical question is, are we rational? And if we really are rational, then why do we throw lavish birthday parties or luxury wedding receptions because these decisions are certainly not rational.

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