Unraveling The Complexity Of Investor Sentiment: A Multidimensional Exploration Within The Theoretical Landscape Of Behavioral Finance

Abstract

Investor sentiment plays a crucial role in financial markets, influencing asset prices, trading volumes, and market volatility. This paper explores investor sentiment from a behavioral finance perspective, examining its theoretical underpinnings, empirical evidence, and practical implications. Drawing on insights from psychology, sociology, and economics, we analyze the factors driving investor sentiment, its impact on market dynamics, and the challenges it poses for traditional financial theory. By synthesizing existing research and offering new theoretical perspectives, this paper aims to enhance our understanding of investor sentiment and its implications on investment decisions and market efficiency.