Psychology of Risk in Economic Decision-Making Under Martial Law: Evidence from Ukraine

Abstract The purpose of the study was to identify the impact of martial law on economic decision-making in the field of business in Ukraine. The aim of the study was to assess the impact of martial law on business decisions, including measuring financial stress levels, risk perception, and financial anxiety. The methodology involved conducting surveys and experiments to understand the impact of risk information on strategic planning, the impact of stress on hiring and firing decisions, the impact of financial stress on pricing, and the impact of uncertainty on investment decisions. This leads to a decrease in the quality of strategic planning and makes it more difficult to focus on important tasks. It was found that organisations with a high level of risk perception usually resort to more conservative approaches. This includes reducing investment and spending on new projects, and frequent pricing adjustments to reduce financial risks. Organisations adapt their strategies to changing economic conditions, which helps to avoid financial losses during periods of high uncertainty. The results of the study also show that high levels of stress among managers lead to a decrease in hiring new employees and an increase in the likelihood of layoffs. Organisations with financial difficulties can raise prices for their products or services to cover rising costs, or lower prices to maintain market competitiveness. The uncertainty caused by martial law leads to a significant reduction in investment in new projects and technologies. Organisations focus their resources on maintaining existing assets and ensuring stability. The findings show that martial law can significantly affect business economic decision-making.