General
Behavioral Finance
Also known as: Behavioral Economics, Investment Psychology, Financial Psychology
The study of psychological influences on investor behavior and its impact on financial decisions.
Detailed Explanation
Behavioral Finance combines psychological insights with conventional financial theory to explain why investors make irrational decisions. It identifies cognitive biases like loss aversion, overconfidence, and recency bias that cause systematic deviations from rational investment behavior. Understanding these biases helps investors build better systems and guardrails to automate good financial decisions and avoid emotional money mistakes.