A Study on Individual Investors' Bias towards Investment Decision Making through the Concept of Neurofinance in NSIC Ltd. (eBook)

Seminar paper from the year 2020 in the subject Business economics - Investment and Finance, grade: 9.0, , course: MBA, language: English, abstract: The objectives of the study are to determine the psychological factors which play an important role behind the
individual investors’ bias, in order to understand the influences of the individual investors’ bias, which can help the individual investors to avoid pitfalls while making investment decisions, and to create a literature on the research field of neurofinance.

Investors’ bias plays an important role in investment decision making because the bias is the combination of emotional and psychological factors which make the investor not to rely on the available information which certainly leads the investor to the irrational manner towards the investment decision making. Finance also looks at the investors and notes that they are not behaving according to the theories like prospect theory. A new trend in the finance, which is certainly in an embryonic stage and is termed as“Neurofinance”.

Neurofinance is the mixture of finance, psychology and neurosciences. Neurofinance uses the insights of psychology such as knowledge about the bias to understand and possibly correct mistakes committed by the individual investor towards their investment decision making. It tries to make sense of the facts on the investors’ bias towards investment decision making which indeed makes them behave irrational towards investment decision making.