In behavioural finance, investors are normal means; they are fundamentalists or investors who follow the fundamental value of the market. Although rational investors are the same as the fundamentalists or what you call normal, rational investors are assumed to compete against irrational investors, also called noise traders.
A distinction is made between rational and normal investors; normal (or ordinary) investors are affected by cognitive biases and emotions. Rational investors are not and care only about the risk and expected return of their investments. Ordinary investors include other factors in their decisions.
Behavioral investors depend on what the investor wants, even if the decision is beyond rationality, as the investor may make the investment decision based on the acquisition of shares by a company and not others merely because he sees that one of the owners of this company is his friend, brother, contributors, ideological beliefs, and other things Decisions related to the relationships between the investment decision-maker and the existing companies offering stocks and bonds, and many behavioral decisions are far from rational. Dil Krishna Shahu
Both theories assume investors are normally distributed across the markets, whether convention finance or behavioural finance. However, as @prof., Hans-Georg Petersen indicated a distinction is made to differentiate between rational investors, who care about the risk and expected return of their investments, usually called fundamentalists and irrational investors, also called technical investors, who tend to destabilise the market .
In the 1980s and 1990s, most scientific papers heavily discussed the results of rational and irrational investors or noise traders across financial markets as two groups of competing traders. A good example is (De Long, Shleifer, Summers, & Waldmann, 1990). In the past several years, researchers have divided market participants into fundamentalist, rational, and irrational investors. A good example is (Brock & Hommes, 1997).
However, the conclusion of all scientific papers till today rests on how irrational traders destabilized the market and how rational investors cannot compete against them.
The rational approach assumes that people are perfectly logical with their behaviour. The behavioural approach says that people are not logical because they are bias both knowingly and unknowingly.
Most of the important theories in finance (EMH, CAPM, MPT) assumes human as rational agent.As such, all their investment decision will be made with proper analysis and framework in order to maximise their profit.
The behavioral finance argues that investors are not always rational (according to that definition). Practically, there will always be a group of investors who make their decision without proper analysis. There are also some who decides not to maximize their return due to ethical and religiosity belief.
Some would call them as irrational investors but i would rather classify them following Richard Thaler's "econs" vs "human"
Richard Thales response is very 21st Century. I studied the subject of behavioural and managerial economics, which go back to the Institutional Economics a century ago and the works of Simon, Cyert and March, Williamson, Baumol and Marris from the 1950s and 1960s. I have also put this into practice and yielded results. Williamson developed tyhe debate until he died and I went on a parallel path but could not find a Supervisor to do a PhD with.