FINANCIAL BUSINESS IN TIMES OF UNCERTAINTY: BEHAVIORAL MECHANISMS OF INVESTMENT DECISION TRANSFORMATION
Abstract
The article examines the transformation of investor behavior during periods of heightened economic, geopolitical, regulatory and technological uncertainty. Unlike a purely descriptive approach, the study applies a behavioral-analytical methodology based on the sequence “concept mechanism of action empirical manifestation implications for financial business regulatory conclusions”. The paper argues that in crisis periods investors do not act only as rational agents comparing risk and return. Their decisions are substantially shaped by loss aversion, herding behavior, availability heuristic, anchoring, overconfidence and fear of missing out (FOMO). These behavioral biases interact with the intensity and social reinforcement of information signals, amplifying irrational market dynamics. Based on the cases of the 2008 financial crisis, the COVID-19 pandemic, Russia’s full-scale invasion of Ukraine, the 2025 tariff shock, the GameStop episode and the 2022 crypto winter, the article demonstrates that uncertainty changes not only the structure of investment portfolios but also the underlying logic of investment choice. Each crisis episode reveals distinct combinations of behavioral mechanisms and institutional responses. The empirical part is supported by quantitative indicators: peak VIX values, cryptocurrency market capitalization losses, sectoral reaction of the S&P 500 to the tariff shock and the projected growth of robo-advisory assets under management. The article proposes an integrated model of investor behavior transformation and financial business adaptation that connects external shocks, psychological responses, behavioral patterns, technological tools and regulatory responses. The findings show that the competitiveness of financial institutions in an environment of permanent uncertainty depends on their capacity to combine digitalization, personalization, transparent communication, behavioral diagnostics and adaptive regulation. The study contributes to the development of behavioral finance by linking individual investment biases with institutional changes in financial services and by offering a replicable framework for analyzing investor behavior in crisis-prone financial markets.
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