Risk Tolerance: Heuristic Bias Towards Investment Decision Making
Dublin Core
Title
Risk Tolerance: Heuristic Bias Towards Investment Decision Making
Subject
Overconfidence bias, Availability bias, Risk tolerance, Investment decision, Bounded rationality
Description
Objective: This study aims to examine how risk tolerance influences the role of overconfidence bias and availability bias in investment decision-making. Because of the complexities of the investment decision-making process, this study attempts to investigate psychological variables in the investment decision-making process.
Design/Methods/Approach: This study used the Structural Equation Modeling Partial Least Squares (SEM-PLS) analytic approach using the SmartPLS 3 program and survey data provided online to stock investors, with a total of 303 samples obtained. The study applied CMB preventive techniques to decrease common method bias (CMB).
Findings: The results indicate a positive and significant mediating role of risk tolerance on the effect of overconfidence bias and availability bias toward investment decision-making.
Originality/Value: This research seeks to explore the process of making investment decisions by taking into account the psychological aspects of investors by using a more comprehensive Bounded rationality theory point of view. This study tested the mediation mechanism of risk tolerance in bridging the influence of heuristic bias on investment decision-making, which has not been explored much by previous studies.
Practical/Policy implication: The findings can guide investors to consider how they make biased investment decisions and help investment managers assess the appropriate level of investment risk.
Design/Methods/Approach: This study used the Structural Equation Modeling Partial Least Squares (SEM-PLS) analytic approach using the SmartPLS 3 program and survey data provided online to stock investors, with a total of 303 samples obtained. The study applied CMB preventive techniques to decrease common method bias (CMB).
Findings: The results indicate a positive and significant mediating role of risk tolerance on the effect of overconfidence bias and availability bias toward investment decision-making.
Originality/Value: This research seeks to explore the process of making investment decisions by taking into account the psychological aspects of investors by using a more comprehensive Bounded rationality theory point of view. This study tested the mediation mechanism of risk tolerance in bridging the influence of heuristic bias on investment decision-making, which has not been explored much by previous studies.
Practical/Policy implication: The findings can guide investors to consider how they make biased investment decisions and help investment managers assess the appropriate level of investment risk.
Creator
*Wahyu Febri Ramadhan Sudirman1 Mohd Winario2, Arif Mudi Priyatno3, Zubaidah Assyifa2
Source
https://e-journal.unair.ac.id/jmtt
Date
August 10, 2023
Contributor
PERI IRAWAN
Format
PDF
Language
ENGLISH
Type
TEXT
Files
Collection
Citation
*Wahyu Febri Ramadhan Sudirman1 Mohd Winario2, Arif Mudi Priyatno3, Zubaidah Assyifa2, “Risk Tolerance: Heuristic Bias Towards Investment Decision Making,” Repository Horizon University Indonesia, accessed December 12, 2024, https://repository.horizon.ac.id/items/show/5666.