The Decline and Fall of the Homo Economicus: The Urgent Need of Understanding Emotions in Financial Decision-Making

Abstract: Through a large state of the art on decision-making in trading, we find that the assumption of traders' rationality is difficult to sustain for individual investors. Even if this is not the mainstream of finance, a growing number of studies demonstrate the need to take emotions into account to understand the behavior of stock market investors. With this in mind, we emphasize the importance of a transdisciplinary approach to understanding stock markets, covering a broad spectrum of variables that influence decision-making process. Thus, the simultaneous use of measurement tools from psychology, sociology and neurophysiology would ensure access to high levels of scientific completeness. At the end of this article, we propose several qualitative tools designed to provide a closer look at the psychological contours of individuals and the emotional fields potentially involved in decision-making. Keywords: Individual Investors, Qualitative Research, Emotions, Decision-Making, Behavioral Finance. Title: The Decline and Fall of the Homo Economicus: The Urgent Need of Understanding Emotions in Financial Decision-Making Author: Pr. Alain Finet, Julie Laznicka International Journal of Social Science and Humanities Research ISSN 2348-3156 (Print), ISSN 2348-3164 (online) Vol. 13, Issue 1, January 2025 - March 2025 Page No: 145-155 Research Publish Journals Website: www.researchpublish.com Published Date: 10-February-2025 DOI: https://doi.org/10.5281/zenodo.14842758 Paper Download Link (Source) https://www.researchpublish.com/papers/the-decline-and-fall-of-the-homo-economicus-the-urgent-need-of-understanding-emotions-in-financial-decision-making