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why do we need behavioral finance? Is it very important for the investors?

why do we need behavioral finance? Is it very important for the investors?

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Behavioural finance is a subfield of Economics. It is based upon psychological theories to understand the Expectations in the stock markets. Behavioural Finance combines scientific studies with cognitive reasoning and economic and financial theories to understand the functioning of stock markets. It explains the reasons behind sudden Rises and lows in the market. It is based upon 4 key concepts which are herd behaviour anchoring mental accounting and self rating. Studying behavioral Finance enables an investor to predict the market behaviour in a better manner and so it will be beneficial for an investor to study the same.

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