Rational Decision Making in Investments

Unit Iv Article Critique
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Rational Decision Making in Investments
Khan, N., & Abid Usman, M. F. J. (2021). The Impact of Investor’s Personality Traits Over Their Investment Decisions with The Mediating Role of Financial Self Efficacy and Emotional Biases and The Moderating Role Of Need For Cognition And The Individual Mood In the Pakistan Stock Exchange. Multicultural Education, 7(8), 766-775.
The author explores the rational decision-making process and the psychological biases affecting young investors' decision-making and gives an in-depth study of the trends the young investors’ decision-making behaviors take. He also tries to analyze the effects of emotion as a bias toward promoting risky decision-making. He intends to explain how biases determine the decision-making process in young investors. He bases his hypothesis on the efficient market theory to justify the presence of emotions in decision-making. Despite a market providing all the information for its investors, irrationalities were encountered, and he attributes them to emotional effects in decision-making (Khan & Abid, 2021). He examines the effects of emotion, illusion of control, and overconfidence towards decision-making by the investors and explains both their indirect and direct interactions.
The objective of an investment is to ensure the safety of the capital, build savings for the future, earn income and meet one’s financial targets or needs. Regardless of the size or reason for an investment, it requires careful and critical choices and extensive and intensive research on the target investment market (Khan & Abid, 2021). A rational approach to decision-making proves a better option in offering insight into the information on history and trends and the possible risks your choice of investment faces (Khan & Abid, 2021). The rational process does not require emotions or intuition, as a slight emotional impulse would significantly affect the outcome of your investment. Rational decision-making processes mostly rely on scientifically approved approaches and could be time-consuming before a decision arrives. Despite that, it still is a better method to employ as it provides a broader safety margin for investment in the current era of technology. Financial technology has risen, and many financial sectors have significantly invested in technology-based systems. There has been a steady rise in the use of technology in banking services and money transfers over recent years. Financial technology has ensured an increase in clientele while reducing the cost of manpower. This has been seen in electronic trading, mobile banking, and money transfers ...