The Cognitive and Psychological Bias in Investment Decision-Making Behavior: (Evidence From Indonesian Investor's Behavior)
Keywords:
Cognitive bias, Psychological bias, Decision Making Behavior, Qualitative
Abstract
The purposes of this research were to understand and analyze the behavior of the psychological bias experienced by investors in making investment decisions. Psychological bias experienced by investors led to wrong decision making and fatal losses. This research used qualitative interpretive phenomenology method to understand the phenomenon of decision making based on the perspective of investors. The result showed that: (1) The phenomenon of cognitive bias and psychological bias behavior occur in nearly all informants, (2) The Psychology bias could be divided by two types, namely: expected emotion bias behavior and immediate emotion bias behavior, (3) experience, knowledge of the capital markets and the management of good emotions determine the level of psychological stability and reduce bias behavior that could be raising the return.
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References
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Thaler, R. H. (2005). Advances in Behavioral Finance: Vol. II (1st ed.). New Jersey: Princeton University Press, Russell Sage Foundation. https://doi.org/10.2307/2329257 Yates, J. F. (1991). Judgment and Decision Making. Englewood Cliffs, NJ: Prentice Hall. Prentice Hall. https://doi.org/10.1002/bdm.3960040107 Yuksel, A. & Yuksel, A. (2009). Stock Return Seasonality and the Temperature Effect. International Research Journal of Finance and Economics, 34, 107–116. Retrieved from https://www.researchgate.net/publication/255663240_Stock_Return_Seasonality_and_the_Tempera ture_Effect.
Published
2018-03-15
How to Cite
Ady, S. U. (2018). The Cognitive and Psychological Bias in Investment Decision-Making Behavior: (Evidence From Indonesian Investor’s Behavior). Journal of Economics and Behavioral Studies, 10(1(J), 86-100. https://doi.org/10.22610/jebs.v10i1(J).2092
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Research Paper
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