Abstract

This study investigates the role of behavioral economics in household financial decision-making in post-crisis markets. Focusing on the influence of cognitive biases such as loss aversion, mental accounting, and risk aversion, the research analyzed data from 500 Nigerian households affected by economic crises, including the 2014-2017 oil price crash and the COVID-19 pandemic. The findings suggest that households with higher loss aversion tend to increase their savings rate, while those engaging in mental accounting are more likely to treat different sources of income differently. Risk aversion significantly reduces investment in risky assets, with conservative financial behaviors more prominent among rural households and lower-income groups. The study emphasizes the need for addressing behavioral biases through financial education and policy interventions to improve financial decision-making and promote long-term financial security.