A Literature Review of Emotional Intelligence and Investment Decision-Making

Abstract

This review explores the role of Emotional Intelligence (EI) in shaping investment decision-making by synthesizing recent empirical findings across behavioural finance, psychology, and decision theory. Moving beyond traditional rational investor models, the review highlights how components of EI such as self-awareness, self-regulation, empathy, and social skills mitigate common behavioural biases including overconfidence, loss aversion, and herding. Evidence from diverse demographic groups (based on age, gender, and occupation) underscores EI’s moderating effect on financial risk perception and decision consistency. The review also examines the implications of EI in financial advisory contexts and emerging fintech platforms, proposing that EI training for advisors and emotional modelling in AI-based systems can enhance decision support. Theoretical gaps are identified, especially around dual-process reasoning and dynamic EI modelling. Ultimately, the review advocates for integrative frameworks that embed EI into both human and machine-based financial decision-making processes to improve investor outcomes in volatile market environments.