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Agus Zainul Arifin
Master of Management Study Program, Universitas Tarumanagara, Jakarta, Indonesia
Decision Sciences, Operations Research & Management Economics, Econometrics & Finance Social Sciences

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THE IMPACT OF OVERCONFIDENCE AND TRAIT ANXIETY ON INVESTMENT DECISIONS AMONG GENERATION Z Vera Handayana Wibowo; Agus Zainul Arifin
International Journal of Application on Economics and Business Vol. 3 No. 4 (2025): November 2025
Publisher : Graduate Program of Universitas Tarumanagara

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.24912/ijaeb.v3i4.1960-1970

Abstract

Investment decisions are not only influenced by rational considerations but also by psychological factors, such as overconfidence and trait anxiety. This study aims to describe the impact of these two psychological characteristics on the investment decisions of Generation Z individuals living in the JABODETABEK area. A descriptive quantitative approach was applied, and data were collected through an online survey involving 200 respondents with prior or current investment experience. The data were analyzed using Structural Equation Modeling (SEM) to examine the relationships between psychological traits and investment behavior. The findings reveal that overconfidence has a positive and significant influence on investment decisions. Generation Z investors tend to overestimate their own knowledge and forecasting abilities, making them more prone to taking high-risk investment decisions. These results are in line with Prospect Theory, which emphasizes the dominant role of cognitive biases, especially overconfidence, in financial decision-making under conditions of uncertainty. In contrast, trait anxiety does not appear to significantly influence investment behavior, although anxiety is theoretically known to affect risk perception and decision-making processes. Based on these findings, the study recommends the inclusion of financial literacy as an additional variable in future research, as it may serve as a mitigating factor to reduce the negative effects of overconfidence and promote more rational investment decisions, particularly among young and less experienced investors.
THE INFLUENCE OF OVERCONFIDENCE AND FINANCIAL LITERACY ON INVESTMENT DECISIONS AMONG GENERATION Z Elsa Ramelpa Silaban; Agus Zainul Arifin
International Journal of Application on Economics and Business Vol. 3 No. 4 (2025): November 2025
Publisher : Graduate Program of Universitas Tarumanagara

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.24912/ijaeb.v3i4.1980-1991

Abstract

This study aims to examine the influence of overconfidence and financial literacy on investment decisions. The study involves 126 respondents, consisting of Generation Z individuals in the Jabodetabek area, who have experience in investing, whether currently active or previously involved in investments in instruments such as stocks, mutual funds, deposits, and foreign exchange, through both digital platforms and traditional methods. The Partial Least Square method was used to analyze the relationship between overconfidence and financial literacy on investment decisions. The results reveal that overconfidence and financial literacy have a positive impact on the investment decisions of Generation Z in Jabodetabek. This study provides a new perspective in understanding the psychological factors influencing investment decisions among Generation Z, particularly in the Jabodetabek area, and can be utilized to help them make more rational and informed investment decisions. Furthermore, the findings are expected to raise awareness among Generation Z regarding the importance of adequate financial literacy and managing self-confidence levels proportionally to avoid making poor investment decisions due to psychological biases. This study is the first attempt to use Generation Z subjects in the Jabodetabek area to evaluate their investment decisions within the context of financial instruments such as stocks, mutual funds, deposits, and foreign exchange in the Indonesian market.
Co-Authors Elsa Ramelpa Silaban Vera Handayana Wibowo