Cognitive and Emotional Drivers of Real-Time Investment Decision Behavior: Evidence from Digital Investors

Abstract

This study examines the mechanisms by which emotional triggers and cognitive load affect real-time investment decisions in digital financial scenarios. In addition, this study focuses at how risk tolerance affects the association between emotional triggers and decision-making and how financial literacy moderates the relationship between cognitive overload and financial decision-making. Data were collected through an online structured questionnaire from 385 active digital investors and analyzed using SmartPLS 4.0 through PLS-SEM. This involved assessing the structural model (path coefficients, bootstrapping, and moderation analysis using the two-stage approach) and the measurement model (reliability, convergent validity, discriminant validity).

The findings indicate that cognitive load has a significant positive effect on real-time investment decision behavior, demonstrating that investors under digital market pressure and mental overload are predisposed to execute rapid, heuristic-driven trades rather than engage in systematic evaluation (β = 0.324, p < 0.001). There is also a considerable positive impact of emotional triggers (β = 0.387, p < 0.001). Higher financial literacy lessens the impact of cognitive overload by negatively moderating the link between cognitive load and real-time investment decisions (β = –0.215, p < 0.001). The association between emotional triggers and real-time investing decisions is adversely moderated by risk tolerance (β = –0.187, p < 0.001), indicating that investors with higher risk tolerance are less sensitive to emotional stimuli. The model demonstrates considerable predictive relevance (Q² = 0.312) and corresponds to 48.7% of the variance in real-time investment decisions (R² = 0.487). By highlighting empirical data from real digital investors, This study contributes to the neurofinance and behavioral finance literature by showing how individual differences (risk tolerance and financial literacy) interact with cognitive and emotional factors affecting real-time decisions. It empowers governing bodies, financial advisors, and platform designers with practical advice.

Keywords:

Neurofinance, Cognitive Load, Emotional Triggers, Realtime Investment Decisions, Financial Literacy, Risk Tolerance, Digital Financial Environment.