Examining the Role of Behavioural Biases in Financial Decisions: A Literature Review

Abstract

Aim of the study: The study's main objective is to identify the behavioural biases in the available literature on behavioural finance and study their role in financial decision-making. The study also highlights the significant gaps for future research in behavioural finance.

Methods: The study has used a seven-step methodology to identify behavioural biases and their role in financial decisions and find significant gaps for future research. Articles available in the behavioural finance literature have been used for the study. The study has used 70 articles from various databases, ranging from 1970 to 2021.

Results: The study found 17 common behavioural biases that influence the financial decisions of individuals. These behavioural biases include both cognitive and emotional biases. Behavioural biases have a significant influence on the various aspects of financial decisions. The study concluded that behavioural biases could not be ignored when making financial decisions due to significant influence. Understanding and awareness of these behavioural biases can enhance individuals' overall financial well-being. 

Original value:  The study contributes to the literature by identifying the common behavioural biases and their role in financial decisions and found gaps for further research. The study's findings can be used to study the behavioural biases in further research.

Keywords: Behavioural biases; Behavioural finance; financial behaviour; cognitive biases; emotional biases; financial decisions