Description:

Why do investors panic during market crashes, hold on to losing stocks, follow the crowd, or become overconfident while investing? Traditional finance theories often assume that investors are rational decision-makers, yet real-world financial behaviour tells a different story. Behavioural Finance (2nd Edition) offers a comprehensive and insightful exploration of how psychology, emotions, social influences, and cognitive biases shape financial decision-making. Bridging the gap between economics, finance, and behavioural sciences, this book explains why individuals frequently deviate from rationality and how these deviations influence financial markets.

The book discusses key concepts such as Prospect Theory, Regret Theory, Mental Accounting, Anchoring, Herd Behaviour, Overconfidence, Gambler's Fallacy, Attention Anomalies, and several other behavioural biases that influence investment decisions. The text combines theoretical discussions with practical examples, case illustrations, review questions, and contemporary market observations, enabling readers to connect academic concepts with real-world investment behaviour. Special emphasis has been placed on the Indian financial market context, making the book highly relevant for students, researchers, investors, academicians, and finance professionals.

Designed to meet the requirements of management, commerce, economics, finance, and professional courses, this edition provides an updated and interdisciplinary perspective on understanding financial markets beyond numbers and models.

WHAT IS NEW TO THE EDITION

• Four New Chapters on Nudge Theory, Neuro-finance, Pompian Behavioural Model, and Theory of Planned Behaviour have been added.

• Enhanced Pedagogy with new case studies, figures, tables, and over 90 additional assessment questions across the four new chapters.

• Broader Interdisciplinary Scope integrating neuroscience, social psychology, and practitioner-oriented frameworks into the behavioural finance curriculum.

TARGET AUDIENCE

• M.Com (Behavioural Finance)

• MBA (Finance)