What are the Benefits of Behavioral Finance?

[Suba]

Behavioral finance is a discipline that combines finance and psychology where this discipline studies the reactions of investors to financial information and how they make decisions. Behavioral finance also tests the identification, inefficiency and errors of investors in the money and capital markets. Behavioral finance also applies research and experiments that show that investors in the money and capital markets are not always rational, and many of their decisions are wrong.

So basically behavioral finance will teach investors or be useful for:
- Encouraging investors to do research before investing.
- Helping investors to make better decisions.
- Investors can find out the biases they have.

 

[Augusta]

It helps explain market anomalies, tailors financial advice to individual biases, and enhances overall financial planning.