Investor’s Behaviour: A Conceptual Framework

Abstract

This article aims to provide a more comprehensive analysis of the investor’s behaviour. To do so, we first address the concept of individual behaviour which lacks a rigorous, precise definition that would be unanimously accepted. The multidimensional nature and complexity of human behaviour are approached from both a psychological and a financial point of view, by examining its relationship with the genetic structure, the psychic structure and the social environment. Secondly, we investigate the concepts of homo economicus and homo sapiens related to the traditional economic models, and to the behavioural finances approach, respectively, highlighting the “normality” of the investors, who cannot be limited to mathematical policy models. At the same time, we stress the importance of the evolution of homo economicus along with the constantly developing environment and the new challenges and changes faced by the financial markets.