• Fayaz Ahmad Dar
• Dr. Shakir Hussain Parrey
• Prof. Iqbal Ahmad Hakim

Although finance has been studied for thousands of years, however the Behavioral Finance which considers the human behaviors in finance is a quite new area. Traditionally, it was believed that the investors of stock market are rational and they efficiently respond to the new information regarding the stock market products. There are no chances of abnormal returns in the market in the long run, even if the asset prices are not properly valued, they will come to reasonable price level through arbitrage. However, traditional finance theories and neo-classical finance models ignore the importance of investors’ psychology and behavior in the decision-making process. In views of their ignorance, the investors’ behavior is not covered within the frame work of traditional finance theories. Sometimes, the investors make irrational decisions and do not behave rationally because of their incompetence and capacity limitations to process the information. In this direction the present study is an attempt to evaluate the influence of various psychological and behavioural factors on the investment behaviour of investors. The findings of the study point out that Behavioural Finance theories, which are based on the psychological traits to understand that how the Psychological Variables like (Heuristics, Prospects, and Herding), influence the investment behaviour of investors. According to these socio-psychologists, human investment decision processes are subject to several cognitive illusions i.e. illusions caused by heuristic decision process, illusions rooted from the adoption of mental frames grouped in the prospect theory and illusions due to herding variables.

Behavioral Finance, Psychological Variables, Heuristic, Prospect, and Herding variables, Investment decision, Investment performance and Satisfaction

"UNDERSTANDING HEURISTICS, PROSPECTING AND HERDING IN INVESTMENT DECISIONS OF SHARE MARKET INVESTORS: A THEORETICAL APPROACH ", International Journal of Emerging Technologies and Innovative Research (www.jetir.org), ISSN:2349-5162, Vol.5, Issue 7, page no.813-821, July-2018, Available :http://www.jetir.org/papers/JETIR1807579.pdf

"UNDERSTANDING HEURISTICS, PROSPECTING AND HERDING IN INVESTMENT DECISIONS OF SHARE MARKET INVESTORS: A THEORETICAL APPROACH ", International Journal of Emerging Technologies and Innovative Research (www.jetir.org | UGC and issn Approved), ISSN:2349-5162, Vol.5, Issue 7, page no. pp813-821, July-2018, Available at : http://www.jetir.org/papers/JETIR1807579.pdf