Herding Behavior, Overconfidence, Regret Aversion Bias On Investment Decisions

Loppies, Lilian Sonya; Esomar, Maria J.F; Janah, Innayah Nurulita

doi:10.55983/ijeset.v1i5.357

Cited by 3 publications

(3 citation statements)

References 4 publications

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“…Regret aversion bias had a positive but insignificant effect on the investment decisions of Indonesian millennial sharia investors. The investors in this current study were more likely to focus on the current investment analysis rather than their failure in the past was found in previous research (Loppies et al, 2022;Nursalimah & Utami, 2022;Sukamulja et al, 2019;Wardani & Lutfi, 2016).…”

Section: The Effect Of Regret Aversion Bias On Investment Decisionssupporting

confidence: 49%

“…Regret aversion bias is a tendency for investors to avoid the pain of past regrets due to decision-making failures that lead to low-performance results (Akinkoye & Bankole, 2020 in Mahadevi & Asandimitra, 2021). Previous research concludes that this aspect deals with investment decision-making Addinpujoartanto & Darmawan, (2020); Hidayat, (2022); Mahadevi & Asandimitra, (2021) ;Pradhana, (2018), but other research does not (Loppies et al, 2022;Nursalimah & Utami, 2022;Wardani & Lutfi, 2016). With the differences among the research, this current study formulates a hypothesis about regret aversion bias variable that is:…”

Section: The Influence Of Regret Aversion Bias On Investment Decisionsmentioning

confidence: 99%

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Determinants of Millennial Investment Decision-Making in the Sharia Capital Market: A Comprehensive Review

Aeni,

Tubastuvi,

Purwidianti

et al. 2024

JEBA

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Introduction: The study aims to examine the impact of financial literacy, overconfidence, regret aversion bias, herding, and risk tolerance on the investment decisions of the Indonesian millennial generation. Methods: The study used a quantitative approach with a sample of 120 respondents from the millennial generation who invested in the Islamic capital market. A statistical test was done using SPSS IBM 26. Results: Financial literacy and overconfidence significantly influenced investment decisions. On the other hand, regret aversion bias, herding, and risk tolerance had no significant impact on investment decisions. Conclusion and suggestion: The study concluded that financial literacy and overconfidence are the major factors that affect the investment decisions of the Indonesian millennial generation. The government (regulator) and related institutions should take a more proactive approach in providing outreach and education about the importance of financial literacy and overconfidence. The millennial generation is interested in investing in the Sharia capital market.

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Section: The Effect Of Regret Aversion Bias On Investment Decisionssupporting

confidence: 49%

Section: The Influence Of Regret Aversion Bias On Investment Decisionsmentioning

confidence: 99%

Determinants of Millennial Investment Decision-Making in the Sharia Capital Market: A Comprehensive Review

Aeni,

Tubastuvi,

Purwidianti

et al. 2024

JEBA

View full text Add to dashboard Cite

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“…Investors often navigate through an intricate landscape shaped by economic fundamentals and cognitive and emotional factors that can significantly influence their stock trading decisions. Behavioral biases, rooted in psychological tendencies, can lead investors to deviate from rational decision-making, affecting market dynamics and individual financial outcomes (6) . This study delves into the intricate interplay between behavioral biases and investors' stock trading decisions, seeking to unravel how psychological factors shape investment behavior.…”

Section: Introductionmentioning

confidence: 99%

Impact of Behavioral Biases on Investors’ Stock Trading Decisions: A Comprehensive Quantitative Analysis

Shukla,

Dadhich,

Vaya

et al. 2024

IJST

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Objective: This paper aims to investigate the impact of specified behavioral biases on investors' stock trading decisions in North India. It has been observed that most of the research works are based on financial theories, which affect investment decisions. But besides the theories nowadays, behavioral biases also play an important role in investment decisions, which was less focused in the previous literature. Methods: The study used primary data collected from a sample from North Indian States (Uttar Pradesh, Delhi, Haryana, and Punjab) through a structured questionnaire to analyze the impact of specified behavioral biases on investors' stock trading decisions. We used structural equation modelling to find out the significant impact of behavioral biases on stock trading and investment decisions. Findings: The investigation determined that the majority of the designated cognitive biases, such as the Overconfidence Bias, the Representativeness Bias, and the Herding Bias, exert a significant influence on the decisions about stock trading and investment made by investors. Novelty: The ample research in this domain has primarily occurred in various countries, with only a limited number of studies conducted specifically at the Indian level. Nevertheless, based on the literature review, it is evident that this study is groundbreaking in North India. The objective of this research is to enhance the effectiveness of financial advisors by gaining a deeper understanding of the psychological aspects of clients. This, in turn, will aid in developing portfolios tailored to individual behavior, aligning with client preferences. Recognizing and addressing behavioral biases is crucial for individual investors as they strive to make informed and successful financial decisions. Keywords: Behavioral Biases, Overconfidence (OC) bias, Representativeness Bias (RB), Herding Bias (HB), Structural Equation Modelling

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Behavioral determinants of investment decisions: evidence from Indian retail equity investors in the wake of COVID-19 induced financial risks

Hans,

Choudhary,

Sudan

2024

IJAIM

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Purpose The study aims to identify and understand the underlying behavioral tendencies and motivations influencing investor sentiments and examines the relationship between these underlying factors and investment decisions during the COVID-19-induced financial risks. Design/methodology/approach The study uses the primary data and information collected from 300 Indian retail equity investors using a nonprobability sampling technique, specifically purposive and snowball sampling. This research uses the insights from Phuoc Luong and Thi Thu Ha (2011) and Shefrin (2002) to delineate behavioral factors influencing investment decisions. Structural equation modeling estimates the causal relationship between underlying behavioral factors and investment decisions during the COVID-19-induced financial risks. Findings The study establishes that the “Regret Aversion,” “Gambler’s Fallacy” and “Greed” significantly influence investment decisions, and provide a comprehensive understanding of how psychological motivations shape investor behavior. Notably, “Mental Accounting” and “Conservatism” exhibit insignificance, possibly influenced by the unique socioeconomic context of the pandemic. The research contributes to 35% of variance understanding and prompts the researchers and policymakers to tailor investment strategies aligned to these behavioral tendencies. Research limitations/implications The findings hold policy implications for investors and policymakers and provide tailored recommendations including investor education programs and regulatory measures to ensure a resilient and informed investment community in the context of India's evolving financial landscapes. Originality/value Theoretically, behavior tendencies and motivations have been strongly linked to investment decisions in the stock market. Yet, empirical evidence on this relationship is limited in developing countries where investors focus on risk management. To the best of the authors’ knowledge, this study is among the first to document the influence of underlying behavioral tendencies and motivation factors on investment decisions regarding retail equity in a developing country.

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Herding Behavior, Overconfidence, Regret Aversion Bias On Investment Decisions

Cited by 3 publications

References 4 publications

Determinants of Millennial Investment Decision-Making in the Sharia Capital Market: A Comprehensive Review

Determinants of Millennial Investment Decision-Making in the Sharia Capital Market: A Comprehensive Review

Impact of Behavioral Biases on Investors’ Stock Trading Decisions: A Comprehensive Quantitative Analysis

Behavioral determinants of investment decisions: evidence from Indian retail equity investors in the wake of COVID-19 induced financial risks

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