Mind and Money: Exploring Psychological Factors Shaping Financial Decisions and Investor Behavior

Abstract

This study examines how psychological biases shape financial decisions and investor behavior. The literature review includes historical development, frameworks of behavioral finance and studies of heuristic and biases of psychology. The FTX cryptocurrency exchange case has been investigated in the context of behavioral finance. The research also includes the impact of psychological factors on investors in Kazakhstan, using a survey and interviews. The results of the FTX Case Study showed that investors in this situation were exposed to biases such as representativeness, availability, overconfidence, over-reaction and herd effect. The analysis of the survey of psychological variables for investors in Kazakhstan showed that they are vulnerable to the effects of prejudice, such as anchoring bias, availability, overconfidence, over- reaction and herd effect. The results of the survey were confirmed by an analysis of interviews. Common biases have also been identified between FTX Case and result of Kazakhstan’s behavioral aspects. The analysis sheds light on the importance of understanding the role of psychology in the world of finance, both in the context of the FTX case and in relation to the Kazakh financial market. In general, the results make it possible to understand what biases an investor needs to work with both in the Kazakh market and in the global market