How Cognitive Biases Drive Investment Behavior: Analyzing Indonesian Investors' Financial Choice

How Cognitive Biases Drive Investment Behavior: Analyzing Indonesian Investors' Financial Choice

Imawati Yousida, Rumaizah, Dwi Rochmawati

How Cognitive Biases Drive Investment Behavior: Analyzing Indonesian Investors' Financial Choice

This research investigates the impact of three cognitive biases—disposition bias, representativeness bias, and anchoring bias—on investment decision-making, specifically in the context of Indonesian investors. These biases are examined as key psychological factors that influence how investors make financial choices and how these decisions shape their investment behavior. The study also considers the role of these biases in influencing investment outcomes, providing insights into how cognitive factors affect the financial decision-making process. The target population consists of Indonesian investors aged between 18 and 60, all of whom have prior experience in capital market investments. The respondents are selected to ensure diversity, with a focus on gaining insights from both male and female participants. The research uses a sample of 105 respondents, with data analysis conducted through SPSS 20.0 to evaluate three hypotheses related to the influence of disposition, representativeness, and anchoring biases on investment decisions. The t-test results indicate that all three biases have a statistically significant impact on investment decision-making, confirming that these psychological factors play a crucial role in shaping financial choices. With t-values showing significance for each bias, the findings suggest that these biases significantly influence how individuals approach their investment decisions. The study’s conclusions offer valuable insights for financial institutions to better understand the cognitive drivers behind investment behavior and provide actionable recommendations to mitigate the effects of these biases in investment decision-making.

2025/06/20

https://insyma.org/proceedings/files/articles/Imawati Yousida.pdf

https://insyma.org/proceedings/items/show/495

Investment Decision-Making, Disposition Bias, Representativeness Bias, Anchoring Bias, Indonesian Investors.

1134

1138

3047-857X

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

22

Fakultas Bisnis dan Ekonomika, Universitas Surabaya

Imawati Yousida

Rumaizah

Dwi Rochmawati

183

Imawati Yousida, Rumaizah, Dwi Rochmawati