Emotional finance and investor biases: a thematic analysis of psychological determinants in financial decision-making

Behavioral finance has gained great popularity in recent years. Despite its increasing popularity, there are still many gaps in our understanding of unconscious psychological processes, emotions, and cognition that guide investor behavior and create market anomalies. In this article, we conducted a thematic analysis of n=185 sources of scholarly-recorded data to develop a comprehensive set of themes that describe emotional finance. The findings describe how emotions and mental biases can create market volatility, affect investment strategies, and undermine financial stability, showing how the framing of financial information affects investors' emotions and investment decisions. The theoretical contribution of this article is to integrate insights from the emerging field of emotional and psychological approaches to finance with well-established findings from behavioral decision research. It also has practical relevance for regulators, individual investors, and other organizational actors seeking to manage the risks posed by framing effects in financial markets.