Economic Thought and Practice, , 2026.
Review article
https://doi.org/10.17818/EMIP/2025/51
PSYCHOLOGICAL INFLUENCES AND INVESTOR BEHAVIOUR IN FINANCIAL DECISION-MAKING: INSIGHTS FROM FINANCIAL CRISES
Stella Suljić Nikolaj
orcid.org/0000-0002-0435-4047
; University of Rijeka, Faculty of Economics and Business
*
Bojana Olgić Draženović
orcid.org/0000-0002-5175-7439
; University of Rijeka, Faculty of Economics and Business
Andrea Nisbet
orcid.org/0009-0007-1759-7690
* Corresponding author.
Abstract
Traditional financial theory assumes that investors make decisions based on complete and objective information. However, not all information is available in the financial market, and investors are not completely rational; rather, they act under the influence of various emotional, cognitive, and social biases, as confirmed by behavioural finance. This is particularly evident during crises when, influenced by news, media, collective fear, panic, or excessive optimism investors make irrational decisions that negatively affect market indices. The aim of this paper is to investigate psychological factors and patterns of investor behaviour during historical financial crises. The methodological approach combines a theoretical overview of behavioural finance with a comparative analysis of five of the most significant financial crises: the Great Depression, Black Monday (1987), the Dot-com bubble, the Global Financial Crisis, and COVID-19. The analysis supports the hypothesis that investor behaviour in crises follows recurring patterns of bias. The findings confirm that various biases significantly influence investment decisions, making them important for explaining deviations from rational behaviour during periods of financial distress.
Keywords
behavioural finance; biases; financial market; investors
Hrčak ID:
340352
URI
Publication date:
5.12.2025.
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