Heuristic Bias and Loss Aversion Impact in Stock Investment Decision Making in Batam
Abstract
Technological advancements affect an individual's financial management by increasing spending and necessitating investments to meet these needs. This research intends to analyze the effect of heuristic bias and loss aversion on investment decision. This study uses the investment decision variable to be the dependent variable and uses overconfidence, availability, representativeness, anchoring, gambler fallacy, and loss aversion to be the independent variables. This study uses the SmartPLS application to analyze data and uses an online questionnaire to collect respondents' answers. Sampling was conducted using purposive sampling technique to collect samples from investors in Batam. The study shows that gambler fallacy, loss aversion, overconfidence and representativeness bias have a significant positive impact on investment decisions, while anchoring and availability bias have no significant impact on investment decisions.
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References
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Banerji, J., Kundu, K., & Alam, P. A. (2020). Influence of behavioral biases on investment behavior. SCMS Journal of Indian Management, 17(1), 81–98.
Dangol, J., & Manandhar, R. (2020). Impact of Heuristics on Investment Decisions: The Moderating Role of Locus of Control. Journal of Business and Social Sciences Research, 5(1), 1–14. https://doi.org/10.3126/jbssr.v5i1.30195
Dewi, S., . E., & Rini, E. S. (2020). The Effect of Efficient Market Hypothesis, Gambler’s Fallacy, Familiarity Effect, Risk Perception, and Economic Factors on Investment Decisions (Studies on Capital Market Investors in Medan City). International Journal of Innovative Science and Research Technology, 5(8), 285–291. https://doi.org/10.38124/ijisrt20aug202
Elhussein, N. H. A., & Abdelgadir, J. N. A. (2020). Behavioral Bias in Individual Investment Decisions: Is It a Common Phenomenon in Stock Markets? International Journal of Financial Research, 11(6), 25. https://doi.org/10.5430/ijfr.v11n6p25
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Fitri, H. K., & Cahyaningdyah, D. (2021). The Influence of Representativeness on Investment Decision Through Overconfidence. Management Analysis Journal, 10(2), 739–748. https://journal.unnes.ac.id/sju/index.php/maj/article/view/48890
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Herman, H., Hady, H., & Arafah, W. (2018). The Influence of Market Orientation and Product Innovation on the Competitive Advantage and Its Implication toward Small and Medium Enterprises (Ukm) Performance. International Journal of Science and Engineering Invention, 4(08), 8–21. https://doi.org/10.23958/ijsei/vol04-i08/02
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Iram, T., Bilal, A. R., & Ahmad, Z. (2023). Investigating The Mediating Role of Financial Literacy on The Relationship Between Women Entrepreneurs’ Behavioral Biases and Investment Decision Making. Gadjah Mada International Journal of Business, 25(1), 93–118. https://doi.org/10.22146/gamaijb.65457
Jain, J., Walia, N., & Gupta, S. (2020). Evaluation of behavioral biases affecting investment decision making of individual equity investors by fuzzy analytic hierarchy process. Review of Behavioral Finance, 12(3), 297–314. https://doi.org/10.1108/RBF-03-2019-0044
Keswani, S., Dhingra, V., & Wadhwa, B. (2019). Impact of Behavioral Factors in Making Investment Decisions and Performance: Study on Investors of National Stock Exchange. International Journal of Economics and Finance, 11(8), 80. https://doi.org/10.5539/ijef.v11n8p80
Khan, I., Afeef, M., Jan, S., & Ihsan, A. (2020). The impact of heuristic biases on investors’ investment decision in Pakistan stock market: moderating role of long term orientation. Qualitative Research in Financial Markets, 13(2), 252–274. https://doi.org/10.1108/QRFM-03-2020-0028
Kumar, Y., & Nayak, R. (2019). Role of Behavioral Factors in Share Market Investment Decision Making. International Journal of Innovative Technology and Exploring Engineering, 8(12S2), 786–796. https://doi.org/10.35940/ijitee.l1135.10812s219
Kumara, R. M. K. S., & Kawshala, B. A. H. (2021). The Impact of Heuristic Biases on Investors’ Investment Decision Making; Evidence from Colombo Stock Exchange. Journal of Business and Technology, 2028, 86–103. https://doi.org/10.4038/jbt.v5i0.55
Loris, R. P., & Jayanto, P. Y. (2021). the Effect of Representativeness, Availability, Anchoring, Risk Perception, and Herding on Investment Decisions Syariah Investors. Jurnal Akuntansi, 11(1), 81–92. https://doi.org/10.33369/j.akuntansi.11.1.81-92
Madaan, G., & Singh, S. (2019). An analysis of behavioral biases in investment decision-making. International Journal of Financial Research, 10(4), 55–67. https://doi.org/10.5430/ijfr.v10n4p55
Mahadevi, A. S., & Asandimitra, N. (2021). Pengaruh Status Quo, Herding Behaviour, Representativeness Bias, Mental Accounting,Serta Regret Aversion Bias Terhadap Keputusan Investasi Investor Milenialdi Kota Surabaya. Jurnal Ilmu Manajemen, 9(2), 1–15.
Mahmood, F., Arshad, R., Riaz, A., Usman, M., & Bashir, M. (2023). Do Behavioral Biases Impact Investment Decisions? Stock Market Investor’s-Based View. Multicultural Education, February.
Mastura, A., Nuringwahyu, S., & Zunaida, D. (2020). Pengaruh Motivasi Investasi, Pengetahuan Investasi Dan Teknologi Informasi Terhadap Minat Berinvestasi Di Pasar Modal (Studi Pada Mahasiswa Fia Dan Feb Unisma Yang Sudah Menempuh Mata Kuliah Mengenai Investasi). Jiagabi, 9(1), 64–75.
Novianto, J. (2021). Investor’s Behavior and Stock Investment Decision in Batam City. Akuntabel, 18(3), 532–542. https://doi.org/10.29264/jakt.v18i3.10029
Pokharel, P. R. (2020). Behavioral Factors and Investment Decision: A Case of Nepal. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.3687104
Pradeepkumar, S. (2021). The Influence of Heuristics on the Investment Decisions of Investors. The IUP Journal of Financial Risk Management, 18(2), 2021.
Qasim, M., Hussain, R. Y., Mehboob, I., & Arshad, M. (2019). Impact of herding behavior and overconfidence bias on investors’ decision-making in Pakistan. Accounting, 5(2), 81–90. https://doi.org/10.5267/j.ac.2018.7.001
Ratnadi, N. M. D., Widanaputra, A. A. G. P., & Putra, I. N. W. A. (2020). Behavioral factors influencing investment decision-making by college student: An empirical study in Bali Province, Indonesia. International Journal of Scientific and Technology Research, 9(2), 1358–1368.
Saeed, K. (2019). Impact of Heuristic Biases on Investment Decision Locus of Control Playing a Moderating Role. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.3499658
Saputra, M. H., R, M., & Hassandi, I. (2023). Anchoring Bias dalam Pengambilan Keputusan Investor Ritel (Studi Peristiwa Selama Pandemi COVID-19). Jurnal Ilmiah Manajemen Dan Kewirausahaan (JUMANAGE), 2(2), 182–190. https://doi.org/10.33998/jumanage.2023.2.2.780
Saputra, S. E., Natassia, R., & Utami, H. Y. (2020). The Effect of Religiosity Moderation with Loss Aversion on the Investment Decision of Personal Investors Kind of Stock Security in Padang City. AMAR (Andalas Management Review), 4(1), 40–55. https://doi.org/10.25077/amar.4.1.40-55.2020
Setiawan, E. P. (2020). Analisis Potensi dan Risiko Investasi Cryptocurrency di Indonesia. Jurnal Manajemen Teknologi, 19(2), 130–144. https://doi.org/10.12695/jmt.2020.19.2.2
Shaleha, Hakim, R. (2022). Pengaruh Anchoring Bias Dan Loss Aversion Terhadap Keputusan Investasi Investor Di Mnc Trade Syariah Kota Kendari. Journal of Management, Administration, Education, and Religious Affairs, 4(2), 286–305.
Sudani, F. S., & Pertiwi, I. F. P. (2022). Financial Information Analysis to Minimize Availability Bias, Representative Bias, Anchoring Bias and Adjustment Bias, and Overconfidence Bias in Ivestment Decision Making (Study on Investors at the Sharia Investment Gallery of UIN Raden Mas Said. Social Science Studies, 2(5), 446–460. https://doi.org/10.47153/sss25.3852022
Sudirman, W. F. R., Winario, M., Priyatno, A. M., & Assyifa, Z. (2023). Risk Tolerance: Heuristic Bias Towards Investment Decision Making. Jurnal Manajemen Teori Dan Terapan | Journal of Theory and Applied Management, 16(2), 266–279. https://doi.org/10.20473/jmtt.v16i2.47471
Syahroni, M. I. (2022). Prosedur Penelitian Kuantitatif. EJurnal Al Musthafa, 2(3), 43–56. https://doi.org/10.62552/ejam.v2i3.50
Vukovic, M. (2022). Personality As a Predictor of Students’ Heuristic and Herding Biases in Determining Their Predispositions for Long-Term Investment Decisions. Economic and Social Development: Book of Proceedings, 53–62. https://www.bib.irb.hr/1175551/download/1175551.Book_of_Proceedings_esdJanuary2022_Online.pdf#page=58
Wibowo, M. A., Indrawati, N. K., & Aisjah, S. (2023). The impact of overconfidence and herding bias on stock investment decisions mediated by risk perception. International Journal of Research in Business and Social Science (2147- 4478), 12(5), 174–184. https://doi.org/10.20525/ijrbs.v12i5.2663
Ainia, N. S. N., & Lutfi, L. (2019). Pengaruh Risk Perception, Risk Tolerance, Overconfidence dan Loss Aversion Terhadap Pengambilan Keputusan Investasi. Journal of Economics, Business & Accountancy Ventura, 21(3), 401–413.
Almansour, B. Y., & Arabyat, Y. A. (2017). Investment Decision Making Among Gulf Investors: Behavioural Finance Perspective. International Journal of Management Studies, 24(1), 41–71. https://doi.org/10.32890/ijms.24.1.2017.10476
Armansyah, R. F. (2021). Over Confidence, Mental Accounting, and Loss Aversion In Investment Decision. Journal of Auditing, Finance, and Forensic Accounting, 9(1), 44–53. https://doi.org/10.21107/jaffa.v9i1.10523
Banerji, J., Kundu, K., & Alam, P. A. (2020). Influence of behavioral biases on investment behavior. SCMS Journal of Indian Management, 17(1), 81–98.
Dangol, J., & Manandhar, R. (2020). Impact of Heuristics on Investment Decisions: The Moderating Role of Locus of Control. Journal of Business and Social Sciences Research, 5(1), 1–14. https://doi.org/10.3126/jbssr.v5i1.30195
Dewi, S., . E., & Rini, E. S. (2020). The Effect of Efficient Market Hypothesis, Gambler’s Fallacy, Familiarity Effect, Risk Perception, and Economic Factors on Investment Decisions (Studies on Capital Market Investors in Medan City). International Journal of Innovative Science and Research Technology, 5(8), 285–291. https://doi.org/10.38124/ijisrt20aug202
Elhussein, N. H. A., & Abdelgadir, J. N. A. (2020). Behavioral Bias in Individual Investment Decisions: Is It a Common Phenomenon in Stock Markets? International Journal of Financial Research, 11(6), 25. https://doi.org/10.5430/ijfr.v11n6p25
Falah, F. F., & Haryono, N. A. (2023). The Influence of Herding, Anchoring, Disposition, Personal Income, and Financial Literacy on Generation Z’s Investment Decision Making in Surabaya City. Technium Social Sciences Journal, 47, 379–397.
Fitri, H. K., & Cahyaningdyah, D. (2021). The Influence of Representativeness on Investment Decision Through Overconfidence. Management Analysis Journal, 10(2), 739–748. https://journal.unnes.ac.id/sju/index.php/maj/article/view/48890
Gupta, S., & Shrivastava, M. (2022). Herding and loss aversion in stock markets: mediating role of fear of missing out (FOMO) in retail investors. International Journal of Emerging Markets, 17(7), 1720–1737. https://doi.org/10.1108/IJOEM-08-2020-0933
Hair, J. F., Ringle, C. M., & Sarstedt, M. (2017). Partial Least Squares Structural Equation Modeling (Issue September). https://doi.org/10.1007/978-3-319-05542-8
Hamzah, A., Djuniardi, D., & Supriadi, A. (2022). Pengaruh Overconfidence Bias, Mental Accounting Dan Familiarity Bias Terhadap Pengambilan Keputusan Investasi. Journal of Global Business and Management Review, 4(1), 50. https://doi.org/10.37253/jgbmr.v4i1.6777
Herman, H., Hady, H., & Arafah, W. (2018). The Influence of Market Orientation and Product Innovation on the Competitive Advantage and Its Implication toward Small and Medium Enterprises (Ukm) Performance. International Journal of Science and Engineering Invention, 4(08), 8–21. https://doi.org/10.23958/ijsei/vol04-i08/02
Hesniati, & Dedy. (2021). Faktor-Faktor Yang Mempengaruhi Keputusan Investasi Properti Pada Kota Batam. E-Bisnis : Jurnal Ilmiah Ekonomi Dan Bisnis, 14(2), 89–98. https://doi.org/10.51903/e-bisnis.v14i2.506
Hunguru, P., Sibanda, V., & Tadu, R. (2020). Determinants of Investment Decisions: A Study of Individual Investors on the Zimbabwe Stock Exchange. Applied Economics and Finance, 7(5), 38. https://doi.org/10.11114/aef.v7i5.4927
Iram, T., Bilal, A. R., & Ahmad, Z. (2023). Investigating The Mediating Role of Financial Literacy on The Relationship Between Women Entrepreneurs’ Behavioral Biases and Investment Decision Making. Gadjah Mada International Journal of Business, 25(1), 93–118. https://doi.org/10.22146/gamaijb.65457
Jain, J., Walia, N., & Gupta, S. (2020). Evaluation of behavioral biases affecting investment decision making of individual equity investors by fuzzy analytic hierarchy process. Review of Behavioral Finance, 12(3), 297–314. https://doi.org/10.1108/RBF-03-2019-0044
Keswani, S., Dhingra, V., & Wadhwa, B. (2019). Impact of Behavioral Factors in Making Investment Decisions and Performance: Study on Investors of National Stock Exchange. International Journal of Economics and Finance, 11(8), 80. https://doi.org/10.5539/ijef.v11n8p80
Khan, I., Afeef, M., Jan, S., & Ihsan, A. (2020). The impact of heuristic biases on investors’ investment decision in Pakistan stock market: moderating role of long term orientation. Qualitative Research in Financial Markets, 13(2), 252–274. https://doi.org/10.1108/QRFM-03-2020-0028
Kumar, Y., & Nayak, R. (2019). Role of Behavioral Factors in Share Market Investment Decision Making. International Journal of Innovative Technology and Exploring Engineering, 8(12S2), 786–796. https://doi.org/10.35940/ijitee.l1135.10812s219
Kumara, R. M. K. S., & Kawshala, B. A. H. (2021). The Impact of Heuristic Biases on Investors’ Investment Decision Making; Evidence from Colombo Stock Exchange. Journal of Business and Technology, 2028, 86–103. https://doi.org/10.4038/jbt.v5i0.55
Loris, R. P., & Jayanto, P. Y. (2021). the Effect of Representativeness, Availability, Anchoring, Risk Perception, and Herding on Investment Decisions Syariah Investors. Jurnal Akuntansi, 11(1), 81–92. https://doi.org/10.33369/j.akuntansi.11.1.81-92
Madaan, G., & Singh, S. (2019). An analysis of behavioral biases in investment decision-making. International Journal of Financial Research, 10(4), 55–67. https://doi.org/10.5430/ijfr.v10n4p55
Mahadevi, A. S., & Asandimitra, N. (2021). Pengaruh Status Quo, Herding Behaviour, Representativeness Bias, Mental Accounting,Serta Regret Aversion Bias Terhadap Keputusan Investasi Investor Milenialdi Kota Surabaya. Jurnal Ilmu Manajemen, 9(2), 1–15.
Mahmood, F., Arshad, R., Riaz, A., Usman, M., & Bashir, M. (2023). Do Behavioral Biases Impact Investment Decisions? Stock Market Investor’s-Based View. Multicultural Education, February.
Mastura, A., Nuringwahyu, S., & Zunaida, D. (2020). Pengaruh Motivasi Investasi, Pengetahuan Investasi Dan Teknologi Informasi Terhadap Minat Berinvestasi Di Pasar Modal (Studi Pada Mahasiswa Fia Dan Feb Unisma Yang Sudah Menempuh Mata Kuliah Mengenai Investasi). Jiagabi, 9(1), 64–75.
Novianto, J. (2021). Investor’s Behavior and Stock Investment Decision in Batam City. Akuntabel, 18(3), 532–542. https://doi.org/10.29264/jakt.v18i3.10029
Pokharel, P. R. (2020). Behavioral Factors and Investment Decision: A Case of Nepal. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.3687104
Pradeepkumar, S. (2021). The Influence of Heuristics on the Investment Decisions of Investors. The IUP Journal of Financial Risk Management, 18(2), 2021.
Qasim, M., Hussain, R. Y., Mehboob, I., & Arshad, M. (2019). Impact of herding behavior and overconfidence bias on investors’ decision-making in Pakistan. Accounting, 5(2), 81–90. https://doi.org/10.5267/j.ac.2018.7.001
Ratnadi, N. M. D., Widanaputra, A. A. G. P., & Putra, I. N. W. A. (2020). Behavioral factors influencing investment decision-making by college student: An empirical study in Bali Province, Indonesia. International Journal of Scientific and Technology Research, 9(2), 1358–1368.
Saeed, K. (2019). Impact of Heuristic Biases on Investment Decision Locus of Control Playing a Moderating Role. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.3499658
Saputra, M. H., R, M., & Hassandi, I. (2023). Anchoring Bias dalam Pengambilan Keputusan Investor Ritel (Studi Peristiwa Selama Pandemi COVID-19). Jurnal Ilmiah Manajemen Dan Kewirausahaan (JUMANAGE), 2(2), 182–190. https://doi.org/10.33998/jumanage.2023.2.2.780
Saputra, S. E., Natassia, R., & Utami, H. Y. (2020). The Effect of Religiosity Moderation with Loss Aversion on the Investment Decision of Personal Investors Kind of Stock Security in Padang City. AMAR (Andalas Management Review), 4(1), 40–55. https://doi.org/10.25077/amar.4.1.40-55.2020
Setiawan, E. P. (2020). Analisis Potensi dan Risiko Investasi Cryptocurrency di Indonesia. Jurnal Manajemen Teknologi, 19(2), 130–144. https://doi.org/10.12695/jmt.2020.19.2.2
Shaleha, Hakim, R. (2022). Pengaruh Anchoring Bias Dan Loss Aversion Terhadap Keputusan Investasi Investor Di Mnc Trade Syariah Kota Kendari. Journal of Management, Administration, Education, and Religious Affairs, 4(2), 286–305.
Sudani, F. S., & Pertiwi, I. F. P. (2022). Financial Information Analysis to Minimize Availability Bias, Representative Bias, Anchoring Bias and Adjustment Bias, and Overconfidence Bias in Ivestment Decision Making (Study on Investors at the Sharia Investment Gallery of UIN Raden Mas Said. Social Science Studies, 2(5), 446–460. https://doi.org/10.47153/sss25.3852022
Sudirman, W. F. R., Winario, M., Priyatno, A. M., & Assyifa, Z. (2023). Risk Tolerance: Heuristic Bias Towards Investment Decision Making. Jurnal Manajemen Teori Dan Terapan | Journal of Theory and Applied Management, 16(2), 266–279. https://doi.org/10.20473/jmtt.v16i2.47471
Syahroni, M. I. (2022). Prosedur Penelitian Kuantitatif. EJurnal Al Musthafa, 2(3), 43–56. https://doi.org/10.62552/ejam.v2i3.50
Vukovic, M. (2022). Personality As a Predictor of Students’ Heuristic and Herding Biases in Determining Their Predispositions for Long-Term Investment Decisions. Economic and Social Development: Book of Proceedings, 53–62. https://www.bib.irb.hr/1175551/download/1175551.Book_of_Proceedings_esdJanuary2022_Online.pdf#page=58
Wibowo, M. A., Indrawati, N. K., & Aisjah, S. (2023). The impact of overconfidence and herding bias on stock investment decisions mediated by risk perception. International Journal of Research in Business and Social Science (2147- 4478), 12(5), 174–184. https://doi.org/10.20525/ijrbs.v12i5.2663
Published
2025-02-28
How to Cite
CUANDRA, Fendy et al.
Heuristic Bias and Loss Aversion Impact in Stock Investment Decision Making in Batam.
Matrik : Jurnal Manajemen, Strategi Bisnis, dan Kewirausahaan, [S.l.], p. 94 - 107, feb. 2025.
ISSN 2302-8890.
Available at: <https://ojs.unud.ac.id/index.php/jmbk/article/view/117607>. Date accessed: 26 mar. 2025.
doi: https://doi.org/10.24843/MATRIK:JMBK.2025.v19.i01.p08.
Section
Articles
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