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Journal : Indo-Fintech Intellectuals: Journal of Economics and Business

The Influence of Behavioral Finance on Investment Decision-Making: Understanding the Role of Overconfidence and Risk Perception in Stok Market Trends Utama, Ahmad Nur Budi; Sangaji, Joko; Rimbano, Dheo
Indo-Fintech Intellectuals: Journal of Economics and Business Vol. 4 No. 6 (2024): Indo-Fintech Intellectuals: Journal of Economics and Business (2024)
Publisher : Lembaga Intelektual Muda (LIM) Maluku

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.54373/ifijeb.v4i6.2358

Abstract

This study examines the influence of behavioral finance factors, specifically overconfidence and risk perception, on investment decision-making and stock market trends in the Indonesian market. Using Partial Least Squares Structural Equation Modeling (PLS-SEM) to analyze survey data from individual investors, the findings reveal that overconfidence positively impacts both investment decisions and market trends, while risk perception significantly shapes cautious investment behaviors and collective market sentiment. Additionally, the interaction between overconfidence and risk perception influences investment decisions, highlighting the interplay between cognitive biases and subjective risk assessments. The study provides theoretical contributions by integrating these constructs into a unified model and offers practical implications for investor education, risk management, and market regulation. The results underscore the importance of addressing behavioral biases to enhance investment strategies and promote market stability.