2025, Vol. 6, Issue 2, Part V

Behavioral finance disrupts the traditional way of thinking about money. Rather than assuming everyone behaves completely rationally, it incorporates real human psychology, emotions, routines, and instinctive decisions. In India, more women are joining the workforce, and they’re not just earning; they’re also making important choices about how the family’s money is managed. That’s why it’s essential to explore what truly influences their financial decisions.

The current study explores how behavioral finance impacts the investment decisions of working women in Karnataka. By examining established theories and reviewing research from both India and other countries, the study breaks down how certain biases like overconfidence, risk aversion, mental accounting, herding, anchoring, and loss aversion are actually influence decisions of investors’ particularly women investors. These aren’t just technical terms; they affect how women assess risks, select investments, and make financial choices every day.

But the paper goes further. It also considers how financial knowledge and local culture blend into these decisions. This research focuses specifically on working women in Karnataka, making the findings not just general but tailored, meaningful, and useful for the region. The key message: to help women make better and more confident investment choices, financial education and guidance must be relatable and grounded in their actual behavior.