Behavioral Finance: A Brief Review of the Context

Abstract

The financial decision making of individuals is subject to the functioning of the brain system and its performance, which depend on patterns that are currently recognized as biases of human behavior. This article aims to review in context the new trends emerging from traditional economic, psychological and financial analysis to form the concept of behavioral finance and how these trends affect the individual and environment. The search parameters were based on the traditional economic paradigm and its evolution towards behavioral economics, including sociological, behavioral finance analysis and the biases involved in these. In this way, the literature is reviewed, the various contributions that have been made since the 1990s to the research in question and the empirical measurement and behavioral biases of the financial decision-making process. The first results conclude that the neoclassical economics approach has undergone an evident transformation that includes market agents evaluated rationally and the behaviors acquired in financial decisions due to the intervention of biases associated with people's behaviors.