BEHAVIORAL BIASES IN FINANCIAL DECISION-MAKING: IMPLICATIONS FOR MARKET EFFICIENCY AND ASSET PRICING MODELS

Аннотация

Behavioral biases in financial decision-making have profound implications for market efficiency and asset pricing models. Traditional financial theories assume rational behavior and efficient markets, yet empirical evidence consistently demonstrates that investors are prone to cognitive and emotional biases that distort their decision-making processes. This paper explores the impact of biases such as overconfidence, loss aversion, anchoring, and herding on market outcomes and asset pricing. By synthesizing existing literature and employing a mixed-methods approach, the study examines how these biases challenge the assumptions of the Efficient Market Hypothesis (EMH) and traditional asset pricing models like the Capital Asset Pricing Model (CAPM).