Published Paper Details:

The base of finance has been studied or derived from the classical theories given by many writers, one of them being Scottish economist Adam Smith. Traditional finance related to human beings who could appropriately access the market conditions and took logical decisions regarding their investments and the risk associated with it. On an average, markets were considered efficient and unbiased. On the other hand, logic and reason is absent in case of behavioural finance. People are ruled by their beliefs, emotions, instincts and pre suppositions regarding the investment decisions. In this paper, we will basically focus on the factors that have led to a change from traditional finance to behavioural finance, also a comparative study on both the concepts and also the benefits and disadvantages of twin study. The findings of the study indicate that many variables such as heuristics, biases (representative bias, availability bias & investment bias), overconfidence, locus of control and various other variables have deeply affected the investment behaviour of individuals and firms. Hence the investor must rationally and wisely proceed for all such investment decisions.