Introducyion to behavioural finance

This document provides an overview of behavioral finance, including its history, key concepts, theories, and significance. Behavioral finance developed to better understand puzzling stock market observations using insights from psychology. It recognizes that investors are normal humans subject to cognitive biases rather than perfectly rational as assumed in traditional finance. Major theories covered include prospect theory, loss aversion, mental accounting, and the disposition effect. The document also outlines learning objectives, heuristic-driven biases, the need and scope of behavioral finance, and its potential limitations.