Journal of Finance and Marketing

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Mini Review - Journal of Finance and Marketing (2025) Volume 9, Issue 2

Behavioral Finance and Marketing: How Emotions Shape Investment and Purchasing Decisions

Loewi Jhon*

Department of Cellular Biology; University of Leeds; Leeds, UK.

*Corresponding Author:
Loewi Jhon
Department of Cellular Biology
University of Leeds; Leeds, UK.
E-mail: Jhoni@leeds.ac.uk

Received: 04-Apr-2025, Manuscript No. AAJFM-25-164716; Editor assigned: 06-Apr-2025, PreQC No. AAJFM-25-164716(PQ); Reviewed: 19-Apr-2025, QC No AAJFM-25-164716; Revised: 23-Apr-2025, Manuscript No. AAJFM-25-164716(R); Published: 30-Apr-2025, DOI:10.35841/AAJFM-9.2.289

Citation: Jhon L. Behavioral finance and marketing: How emotions shape investment and purchasing decisions. J Fin Mark. 2025;9(2):289

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Introduction

Behavioral finance and marketing, though traditionally viewed as separate disciplines, intersect significantly in understanding how human emotions and cognitive biases shape both investment and purchasing decisions. Unlike classical economic theories that assume individuals act rationally and are driven by objective data, behavioral approaches recognize that emotions, social influences, and psychological patterns play a crucial role in decision-making. This overlap provides valuable insights into consumer and investor behavior, highlighting the need for strategies that consider not just financial logic but emotional dynamics as well [1, 2].

In the realm of investing, behavioral finance explains why individuals often deviate from rational strategies. Emotions such as fear, greed, overconfidence, and regret significantly influence investor choices. During market volatility, fear can lead to panic selling, even when fundamentals remain unchanged. Conversely, during bull markets, greed and overconfidence may drive irrational exuberance, causing individuals to invest in overvalued assets. Herd behavior, where individuals mimic the actions of others without independent analysis, also illustrates how social emotions can distort market efficiency. These emotional triggers often result in market anomalies like bubbles and crashes, which cannot be fully explained by traditional financial models [3].

Marketing leverages similar emotional tendencies to influence purchasing behavior. Consumers often make buying decisions based not solely on utility or price but on emotional appeal, brand perception, and psychological triggers. For example, advertisements frequently use storytelling, imagery, and music to evoke feelings of happiness, nostalgia, or aspiration, encouraging consumers to associate these emotions with the brand. Limited-time offers and scarcity tactics create urgency and fear of missing out (FOMO), prompting impulsive purchases. Loyalty programs appeal to the emotional need for belonging and reward, encouraging repeat buying behavior that is not purely based on rational evaluation [4, 5].

A shared concept in both fields is the role of cognitive biases. Anchoring bias leads individuals to rely too heavily on the first piece of information encountered, affecting both pricing decisions and investment expectations. Confirmation bias causes consumers and investors to favor information that aligns with their existing beliefs while disregarding contradictory data. Loss aversion—the tendency to prefer avoiding losses over acquiring equivalent gains—is particularly influential, as it affects everything from product returns to risk tolerance in portfolio management [6].

The integration of behavioral finance principles into marketing strategies has given rise to behavioral marketing. This approach uses data on consumer psychology to design more effective campaigns, improve user experience, and personalize messaging. For instance, financial service providers now use behavioral nudges to encourage better saving and investment habits, while e-commerce platforms use A/B testing and behavioral cues to increase conversion rates. Understanding the emotional journey of the consumer or investor allows firms to build trust, reduce friction, and foster long-term engagement [7].

Digital platforms have further amplified the emotional and psychological dimensions of decision-making. Social media, in particular, plays a dual role: it shapes consumer trends through influencer marketing and peer validation while simultaneously influencing investment sentiment through real-time news, opinions, and crowd psychology. The viral nature of content can rapidly sway both consumer confidence and investor sentiment, often independent of the underlying fundamentals [8, 9].

Despite the benefits of incorporating emotional insights into finance and marketing, there are ethical considerations. Manipulating emotions for short-term gains can erode trust and lead to negative outcomes, such as over-indebtedness or risky investments. Responsible application of behavioral principles requires transparency, consumer education, and long-term value creation. Companies and financial institutions that use behavioral insights ethically can foster more informed and emotionally intelligent decision-making among their audiences [10].

Conclusion

In conclusion, emotions are a powerful force that shape both investment and purchasing decisions, bridging the disciplines of behavioral finance and marketing. Recognizing and responding to these emotional and cognitive drivers allows businesses and financial professionals to design strategies that resonate more deeply with their audiences. As the boundaries between finance and marketing continue to blur, especially in digital environments, understanding human behavior through a behavioral lens will be key to creating meaningful connections, promoting sound decisions, and achieving sustained success.

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