Aug 2026· Highlights in Business, Economics and Management· 0 citations· 8 references
Abstract
Based on the theory of behavioral finance, using systematic literature review and comparative analysis methods, this study systematically integrates the connotations and mechanisms of action of two core cognitive biases: overconfidence and over-optimism. This study primarily analyzes the relationship between two types of investor cognitive biases and the respective impacts on market volatility. This study also analyzes the irrational behavior of individual investors and institutional investors under cognitive biases. This study provides an explanation of the intrinsic logic by which the interaction between the two amplifies market volatility. Based on existing literature, this study summarizes the commonalities and differences in the irrational behaviors of individual and institutional investors, points out the limitations of existing research, and provides useful reference and insights for regulating investor behavior and preventing irrational market fluctuations. Finally, looking ahead, the directions for future research include the impact of cross-market sentiment fluctuations and investors' irrational behavior in digital finance scenarios with the development of technology.
Traditional finance generally takes rational decision-making and market efficiency as its starting point, assuming that investors process information rationally. In actual trading, however, investors are influenced by reference points, their response to losses, and subjective judgment. Focusing on the Chinese stock mar...
Zi-Feng Han· Advances in Economics, Manag...· 0 citations
In recent decades, financial markets have witnessed frequent episodes of extreme volatility, asset bubbles, and sudden crashes that cannot be adequately explained by traditional finance theories rooted in the rational investor assumption. Behavioral finance has emerged as a critical framework for understanding these an...
Ying Zhang· Advances in Economics, Manag...· 0 citations
The traditional finance perspective assumes that investors make rational investment decisions by objectively evaluating available information, risk and expected returns. However, behavioural finance demonstrates that psychological and cognitive biases can significantly influence investment behaviour. Among these biases...
Matheswaran S, K. Sarulatha· EPRA international journal o...· 0 citations
This paper uses literature analysis and theoretical reasoning to examine how investor behavioural biases affect the performance of quantitative investment models. It is believed that overconfidence, herding behaviour and loss aversion, as well as the disposition effect that may result from loss aversion, do not directl...
Heng Yan· Advances in Economics, Manag...· 0 citations
The research concentrated on evaluating the role of financial literacy on investment decisions among retail investors. Further, the overconfidence bias is used as the mediator, which is connected with investment decisions and financial literacy. Prospect theory highlights that investors assess outcomes based on losse...
Parvathy Rag Rajan Geetha, S. Kanthimathinathan· Knowledge and Process Manage...· 0 citations
This study examines the empirical literature to identify the key factors influencing investor behavior in mutual funds. Evidence from institutional reports and peer-reviewed research published between 2000 and 2025 is gathered through a PRISMA-based systematic review. The results show that financial education, risk tol...
Noor, Harvinder Singh· International Journal of Bus...· 0 citations
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