Herding Behavior and Risk Perception: Psychological Determinants of Investment Choices in Emerging Markets

Dublin Core

Title

Herding Behavior and Risk Perception: Psychological Determinants of Investment Choices in Emerging Markets

Creator

Tina Lestari, Le Hoai Nam, Muhammmad Mawahib Ahmadi

Proceedings Item Type Metadata

meta_title

Herding Behavior and Risk Perception: Psychological Determinants of Investment Choices in Emerging Markets

Abstract/Description

This research investigates the influence of behavioral factors—overconfidence, risk aversion, and herding behavior—on investment decision-making. Anchored in the principles of behavioral finance, the study emphasizes the psychological underpinnings that drive financial behavior beyond traditional rational models. Using a quantitative approach with a sample of 110 investors in Indonesia, the findings reveal that herding behavior exerts the strongest positive impact on investment decisions, highlighting the pivotal role of social influence in financial markets. Risk aversion also significantly shapes investment choices, indicating that investors with a higher tendency to avoid risk prefer more secure and stable assets. Meanwhile, overconfidence, though positively associated with investment decision-making, demonstrates a comparatively smaller effect. These results underscore the necessity for interventions aimed at improving investors' critical thinking and reducing susceptibility to cognitive and emotional biases. The study contributes to the growing body of literature on behavioral finance by offering empirical evidence on how individual psychological traits affect investment behavior in emerging markets. Future research is encouraged to expand the model by incorporating variables such as financial literacy, emotional intelligence, and market sentiment.

publication_date

2025/06/20

pdf_url

https://insyma.org/proceedings/files/articles/Tina Lestari.pdf

abstract_html_url

https://insyma.org/proceedings/items/show/494

keywords

Behavioral Finance; Investment Decision-Making; Overconfidence; Risk Aversion; Herding Behavior

firstpage

1128

lastpage

1133

issn

3047-857X

conference

Proceedings of the International Symposium on Management (Volume 21, 2024)

Volume

22

publisher_name

Fakultas Bisnis dan Ekonomika, Universitas Surabaya

Author #1

Tina Lestari

Author #2

Le Hoai Nam

Author #3

Muhammmad Mawahib Ahmadi

no article

182

authors

Tina Lestari, Le Hoai Nam, Muhammmad Mawahib Ahmadi

Files

Tina Lestari.pdf

Citation

Tina Lestari, Le Hoai Nam, Muhammmad Mawahib Ahmadi, “Herding Behavior and Risk Perception: Psychological Determinants of Investment Choices in Emerging Markets,” Proceedings of the International Symposium on Management (INSYMA), accessed July 1, 2025, https://insyma.org/proceedings/items/show/494.

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