Behavioral Factors Influence on Investment Decision
Andrieta Shintia Dewi (a*),Nugraha (b),Imas Purnamasari(c), Maya Sari (d), Agus Rahayu (e), Lili Adi Wibowo (f)

a) Faculty of Economics and Business Education, Indonesia University of Education
Jl. Dr. Setiabudi No.229, Kota Bandung, Jawa Barat 40154
*andrieta[at]upi.edu
b),c),d),e),f) Faculty of Economics and Business Education, Indonesia University of Education

Abstract

In making decisions, investors display irrational behavior. The decision-making process is considered to be a cognitive process, as investors must make a choice based on a variety of available options. Various psychological/behavioral factors negatively impacted the investors^ decision-making, according to the findings. The current research was conducted to determine the influence of behavioral factors on the investment decisions of investors. To examine the behavioral biases of investors, five behavioural factors, namely overconfidence bias, representative bias, regret aversion, mental accounting, and herd behaviour, were considered. The cohort for this study consisted of Kerala investors, and the analytical hierarchy process (AHP) was used to assess the influence of behavioral factors on investment decisions. On the basis of the priority vector, it was discovered that overconfidence bias and regret aversion had a significant impact on Kerala^s investors. The effect of herd behavior on their decision-making was diminished.

Keywords: Behavioural finance, overconfidence bias, representative bias, regret aversion, mental accounting, herd behaviour, Investment Decision

Topic: Financial Management and Accounting