Nowadays, the volatility has plagued financial markets worldwide. Investor sentiments have been the key determinants of market movement. In this context, study the role played of investor behavior can shape up investment decisions and it seems become more important. Behavioral finance is an evolving field that studies how influence of certain identified behavioral finance concepts on the decision making process of individual investors. The purpose of this thesis is to examine the investors in Taiwan Stock Exchange from a behavioral finance point of view and thereafter point out the irrational factors affecting to their investment decisions. Furthermore, this study could enhance understanding of individual financial decision through the psychology context. The present thesis has explained based on the selected behavioral finance theory and seek to find influence of certain identified behavioral finance concept on the decision making process of individual investors in Taiwan Stock Exchange. Data that consists of fifteen interviews with three different age groups have been collected to examine the purpose of the thesis. In addition, the results from part of another studies have been included as secondary data. The findings show that all investors were affected by the biases while making investment decision but it could not have established that one investor group had suffered more or less others under the influence of these biases due to the biases are affecting them in different degree and different manner.

Nowadays, the volatility has plagued financial markets worldwide. Investor sentiments have been the key determinants of market movement. In this context, study the role played of investor behavior can shape up investment decisions and it seems become more important. Behavioral finance is an evolving field that studies how influence of certain identified behavioral finance concepts on the decision making process of individual investors. The purpose of this thesis is to examine the investors in Taiwan Stock Exchange from a behavioral finance point of view and thereafter point out the irrational factors affecting to their investment decisions. Furthermore, this study could enhance understanding of individual financial decision through the psychology context. The present thesis has explained based on the selected behavioral finance theory and seek to find influence of certain identified behavioral finance concept on the decision making process of individual investors in Taiwan Stock Exchange. Data that consists of fifteen interviews with three different age groups have been collected to examine the purpose of the thesis. In addition, the results from part of another studies have been included as secondary data. The findings show that all investors were affected by the biases while making investment decision but it could not have established that one investor group had suffered more or less others under the influence of these biases due to the biases are affecting them in different degree and different manner.

ABSTRACT i
ACKNOWLEDGEMENT ii
TABLE CONTENT iii
LIST OF FIGURES iv
LIST OF TABLES v
CHAPTER 1 1
INTRODUCTION 1
1.1 Research Motivation and Background 1
1.2 Research Objectives 3
1.3 Research Flowchart 4
CHAPTER 2 5
LITERATURE REVIEW 5
2.1 Background of Financial Market 5
2.2 Market Efficient 8
2.3 Behavioral Finance 10
2.4 Behavioral Biases and Decision Making 19
CHAPTER 3 22
RESEARCH METHODOLOGY 22
3.1 Research Design 22
3.2 Data Collection Method 23
3.3 Data Analysis 27
3.4 Limitations 27
CHAPTER 4 28
CASE ANALYSIS 28
4.1 Case Study Findings 28
4.2 Investor Behavior 33
4.3 Discussion on Investment Strategies 35
CHAPTER 5 36
CONCLUSIONS AND RECOMMENDATIONS 36
5.1 Conclusions 36
5.2 Recommendations 37
ONLINE REFERENCES 40