Behavioral Finance: Why We Make Financial Decisions the Way We Do

Abstract

Financial decision-making is a process that fundamentally affects not only our economic situation but also our quality of life. Alhough finance is traditionally perceived as an area based on rational thinking, facts and figures - reality shows that financial decisions are signinicantly influenced by other factors, such as cognitive, emotional, and social factors, as well as external in����luences. These factors can fundamentally in����luence our decisions and lead to systematic erors, the consequences of which can range from anxiety and decision paralysis to financial losses, debt, and to missed investment opportunities.