• Yamjala varsha
• Mr.Vinesh Kumar Gowlikar
• Mr.Ravichandra r

Financial market bubbles have been a topic of interest in economic studies for a long time, and investor psychology has been a key factor in their creation and bursting. This research analyzes the role of major cognitive biases such as confirmation bias, overconfidence, loss aversion, availability bias, herd behavior, and anchoring bias on investor behavior and their combined effect on financial market volatility. The results show that psychological biases have a major influence on market trends, which tend to cause excessive speculation, overvaluation of assets, and eventual crashes. Of these biases, anchoring bias and herd mentality have the most significant influence, implying that investors use previous price levels and imitate collective behavior, further fueling market bubbles. The research also supports a robust association between investor psychology and movements in financial markets (β = 0.852, R² = 0.726, p = 0.000), which supports the premise that psychological factors are behind irrational market action. Knowledge of these influences is essential for policymakers, financial analysts, and investors to formulate risk-mitigation policies and foster market stability.

Investor Psychology, Financial Market Bubbles, Cognitive Biases, Confirmation Bias, Overconfidence, Loss Aversion, Availability Bias, Herd Mentality, Anchoring Bias, Speculative Trading, Market Volatility, Behavioral Finance, Irrational Exuberance, Asset Overvaluation, Risk Management, Market Stability.

"The Role of Investor Psychology in Financial Market Bubbles.", International Journal of Emerging Technologies and Innovative Research (www.jetir.org), ISSN:2349-5162, Vol.12, Issue 4, page no.m751-m757, April-2025, Available :http://www.jetir.org/papers/JETIR2504C96.pdf

"The Role of Investor Psychology in Financial Market Bubbles.", International Journal of Emerging Technologies and Innovative Research (www.jetir.org | UGC and issn Approved), ISSN:2349-5162, Vol.12, Issue 4, page no. ppm751-m757, April-2025, Available at : http://www.jetir.org/papers/JETIR2504C96.pdf