UNDERSTANDING THE FINANCIAL DECISION-MAKING PROCESS: INSIGHTS FROM NEUROSCIENTIFIC, PSYCHO-EMOTIONAL, AND CULTURAL PERSPECTIVES

BAHNEAN Paul Gheorghe, West University of Timișoara

PANȚA Nancy Diana, Lucian Blaga University of Sibiu

Abstract:
Behavioral finance designates a field of study that analyzes the behavior of individuals in general and of investors in particular. More, it follows to look into how decisions are taken in a financial context. The investigation of investor behavior considers a series of approaches that range from traditional finance to modern finance and behavioral finance (and even neurofinance). Nowadays, investors are constantly exposed to a vast amount of information, including quantitative financial data and financial news presented in the media. They can also be influenced by the opinions and recommendations of their peers in the social environment. Processing this information can be a difficult task, and market participants often use heuristics to simplify the process. Although the human brain is capable of learning and adapting, the decision-making process involves complex cognitive, emotional, and motivational factors that must be carefully considered. Therefore, this paper aims to enhance our understanding of the financial decision-making process by exploring multiple perspectives proposed by the literature, including the neuroscientific, psycho-emotional, and cultural ones. By undertaking a holistic approach into understanding financial decision-making, this paper follows to provide insights that could help investors make better-informed decisions in the future. Ultimately, a deeper understanding of the factors that underlie financial decision-making could have far-reaching implications for the field of finance and not only.

Keywords: Finance, Investor Behavior, Financial Decision-Making, Behavioral Finance

JEL Classification: G40

Volume: 75, Issue: 3

Pages: 7 - 15

Publication date: October, 2023

DOI: 10.56043/reveco-2023-0022

Download the article: http://economice.ulbsibiu.ro/revista.economica/archive/75301bahnean&panta.pdf

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