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Research Paper | Financial Engineering | India | Volume 4 Issue 3, March 2015

Evolutions and Challenges of Behavioral Finance

Dr. V. Raman Nair | Anu Antony

Abstract: This article presents the evolution of behavioral finance, which is a new approach in capital market. This study reveals the effect of psychological factors in investment decision making process, which was a strong contradiction to the Efficient Market Hypothesis. Behavioral finance is not a replacement to the classical finance paradigm, but an alternative solution to explain the market inefficiency and the irrational behavior of investor.

Keywords: behavioral finance, classical finance, market efficiency, investment decision, psychological factors, market anomalies

Edition: Volume 4 Issue 3, March 2015,

Pages: 1055 - 1059