An empirical study to know the role of emotions in individual investment behavior

During the past several years the investment markets have been characterized by increasing volatility and fluctuations. From an investor's point of view, the vulnerability of markets has lead to increased uncertainty and unpredictability, as market conditions cannot always be judged with the help of standard financial measures and tools. Market participants have for a long time relied on the notion of efficient markets and rational investor behavior when making financial decisions. However, the idea of fully rational investors who always maximize their utility and demonstrate perfect self-control is becoming inadequate. During the recent years, examples of market inefficiency in the form of anomalies and irrational investor behavior have been observed more frequently. By understanding the human behavior and psychological mechanism involved in financial decision-making, standard finance models may be improved to better reflect and explain the reality in today's evolving markets. Our purpose is to describe and conduct a research on what factors, investing characteristics, and decision-making processes affected individual investors. Within this rationale, the study aims to analyze the various Emotional factors that are in the back of an investor when he makes an investment decision. Emotions can wreak havoc on an investor's ability to build long-term wealth. Why did investors sacrifice nearly two-thirds of their potential return? Driven by emotions like fear and greed, they engaged in such negative behaviors as chasing the hot manager or asset class, avoiding areas of the market that were out of favor, attempting to time the market, or otherwise abandoning their investment plan. Great investors throughout history have understood that.