Economic assumptions serve as the cornerstone for the development of economic theories. These assumptions are often formulated not necessarily because they are realistic, but because they facilitate analytical simplification. The primary aim of these assumptions is to predict economic phenomena. When a theory is unable to explain and predict these phenomena adequately, it becomes necessary to revise and strengthen its foundational principles. Behavioral economics emerged in response to dissatisfaction with the inability of theoretical models based on rational expectations to depict financial markets' actual functioning accurately. This field challenges traditional assumptions by incorporating psychological insights into the analysis of economic decision-making. This paper juxtaposes traditional and behavioral perspectives on risk and investment decisions. Through its integration of psychological backgrounds, behavioral economics has significantly questioned the long-standing assumptions of rational models. The most notable contribution of behavioral economics and finance lies in identifying various psychological biases that influence investment decision-making and risk perception, revealing that investors in financial markets frequently exhibit patterns of irrational behavior. By reviewing empirical research from both traditional and behavioral viewpoints, this paper aims to enhance the understanding of investment decision-making dynamics and provide deeper insights into the complexities of decision-making in financial markets.