Integrating Rationality and Behavioral Factors in Investment Decision-Making Under Global Economic Uncertainty

Abstract

Investment decisions play a vital role in maintaining economic stability and enhancing a country’s productive capacity. In the context of global economic uncertainty, investor behavior is often not entirely rational. This study examines the relationship between rationality, uncertainty, and behavioral factors influencing investment decisions. The behavioral finance approach reveals that cognitive biases, emotions, and risk perceptions play crucial roles in the investment decision-making process. Using a literature review method, this research analyzes academic works published over the past five years to understand patterns of rational and irrational decision-making under global uncertainty. The findings indicate that investors who can effectively balance rational and psychological aspects are better positioned to minimize risks and enhance the long-term effectiveness of their investments. Furthermore, the study contributes to the body of financial literature by emphasizing the importance of integrating rational analysis with psychological awareness in the investment decision process. Such integration is essential for developing adaptive, sustainable, and informed investment strategies in an increasingly volatile economic environment.