The paper aims to examine the relationships between behavioural biases (such as overconfidence and herding) and the rational behaviour of Australian female consumers when making financial decisions. In doing so, the paper showcases the financial illiteracy of Australian female consumers when confronted with irregularities within the Australian financial markets. From a theoretical standpoint, the study adopts the notions of the adaptive market hypothesis (AMH) to understand the reasoning behind the relationships between behavioural biases (such as overconfidence and herding) and the rational behaviour of Australian female consumers when making decisions rationally. Using a quantitative approach, a structural equation modelling (SEM) was conducted on the proposed theoretical framework with a cleaned dataset of 357 Australian female consumers, which revealed that behavioural biases significantly influence each stage of rational decision-making when making financial decisions. More precisely, the structural equation modelling (SEM) showcases that herding behaviour has a significant positive relationship with the information search and evaluation of alternative stages when making financial decisions. However, overconfidence behaviour has a significant negative relationship with demand identification and evaluation of alternative stages when making financial decisions. Moreover, the findings also showcase that the proposed theoretical model closely fits with the data utilised, indicating that Australian female consumers do follow rational decision-making when making financial decisions. Additionally, the findings revealed that the education and income levels of Australian female consumers positively influence the stages of rational decision-making. The findings also contend that Australian female consumers have a risk-averse attitude (i.e., within three key hypothetical scenarios) towards financial decisions due to the presence of financial illiteracy. Hence, it is strongly suggested that financial institutions highlight the calculative benefits and returns from financial product purchases in advertising and promotions in a way that appeals to female consumer segments.
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