In modern finance, ther e are two inconsistent standpoints for investor’s decision mechanism. Based on rational expectation, the traditional finance takes information as the foundation of the investor’s decision-making, but starting from irr ational behavior, the behavior l finance concludes that, besides information, psychological and emotional factors also determined the investor’s decision. Relying on the Prospect Theory, this paper analyzed the coexistence of investor’s rational and irrational decision, and thinks that acknowledgement for the existence of rational choice gives an indication of the acquiescence for investor’s irrational decision. In our conclusions, the investor’s decision making is a psychological process which has a black box in it, and, the emotion of investor along with the difficulty of collecting and managing information determines that the foundation of decision-making is rational or not. In other word, the investor will have different judgement in the distinguishing status of market, which makes the securities equilibrium price behave differently, and the Law of Large Numbers of all investors will dec ide what will be embodied in the equilibrium price.

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