In the local energy market (LEM), prosumers, participants who produce and consume energy, are typically considered rational. Nevertheless, their trading behaviors are impacted by multiple factors, such as social relations, personal preferences, and habits. Each of them holds different trading demands regarding benefits, comfort levels, and environmental consciousness, demonstrating bounded rationality. This chapter presents a mental accounting theory-based trading strategy for prosumers. This trading strategy accounts for the trading behaviors in reality via quantifying prosumers’ motivations and psychological changes, which are evaluated by the risk attitude and subjective value models during the multi-account management process. Furthermore, to increase social welfare and market efficiency, this chapter introduces the updated rules of trading decisions and the multi-round bidding market mechanism. Case studies are conducted and following conclusions are verified: (1) the proposed trading strategy can effectively reflect the prosumers’ intentional and limited rationality during the LEM; (2) the proposed market mechanism can effectively improve social welfare and market efficiency.