Behavioural finance

Behavioural finance examines departures from fully rational decision-making, including overconfidence, loss aversion, anchoring and herding. Such behaviour can affect trading, project forecasts, risk perceptions and responses to information. A plausible behavioural explanation is not evidence that every price movement is irrational or that mispricing is easy to exploit. Constraints, costs and uncertainty can prevent investors from correcting apparent anomalies. In a case study, identify the specific behaviour and its consequence rather than merely listing bias names, and consider controls that improve decision quality.