Dinesh BasnetParajuli, Sushil2026-02-202026-02-202025https://hdl.handle.net/20.500.14540/25642This research explores the impact of behavioral factors on investment decisions and Investment Performance at the Nepal Stock Exchange (NEPSE). The primary objective is to identify and analyze these factors to optimize Investment Performance in an emerging market context. The study employs a combination of quantitative and qualitative methods, including self-completion questionnaires and semi-structured interviews, to gather data from individual investors at NEPSE. Statistical techniques such as Factor Analysis, Cronbach‘s Alpha Test, and Structural Equation Modeling (SEM) are used for data analysis. The findings reveal that behavioral factors such as heuristics (overconfidence, gambler‘s fallacy, anchoring, and availability bias), prospect factors (loss aversion, regret aversion, and mental accounting), market factors (price changes, market information, and past trends of stocks), and herding factors (following other investors' decisions) significantly influence investment decisions. Most behavioral factors have a moderate impact on investment decisions, with market factors having the highest influence. Heuristic and herding behaviors positively impact investment performance, while prospect behaviors also show a positive correlation. The study concludes that understanding and managing these behavioral factors can significantly enhance investment performance. Recommendations for investors include maintaining balanced confidence, leveraging reliable investment partners, and considering prior losses for future decisions. The study contributes to the field of behavioral finance by providing empirical evidence on the impact of behavioral factors on Investment Performance in an emerging market context, offering practical insights for investors, financial advisors, and policymakers. Keywords: Behavioral Finance, Investment Decisions, Investment Performance, NEPSE, Emerging Marketen-USInvestment decisionEconomic developmentThesis