Divergent Impacts of Mental Accounting on Retirement Investment Decisions: A Comparative Analysis in Eastern and Western Market Contexts

This paper reviews the literature to compare the impact of mental accounting on retirement investment in Eastern and Western markets, revealing how cultural values, institutional design, and behavioral economics interact to shape distinct investment behaviors. The study finds that Eastern markets, influenced by collectivist cultures, tend to favor low-risk instruments such as savings and real estate. While this approach ensures short-term security, it often lacks sufficient long-term returns. In contrast, Western markets, driven by individualistic values, encourage diversified investment strategies, including stocks and mutual funds. However, these strategies are exposed to higher volatility and market risks. By applying mental accounting theory, this paper proposes culturally adaptive optimization strategies to balance risk and return, enhancing retirement investment efficiency across different market contexts. The findings offer valuable insights for policymakers, financial institutions, and product designers, suggesting that a hybrid approach integrating the strengths of both market paradigms may help improve long-term retirement security.