INDIVIDUAL BEHAVIOR BIAS IN INVESTMENT DECISION-MAKING

Abstract-Cognitive aspects and emotional aspects strongly influence individual behavior in making decisions. These aspects often cause individuals to behave biased in decision-making. This research empirically tests cognitive biases (herding and anchoring) and emotional biases (overconfidence bias and disposition effects) in making stock investment decisions on the Indonesian capital market—data obtained by survey. Respondents are young investors who are trading in the investment gallery of Udayana University-Bali, Indonesia. The questionnaire responds as many as 173—the Data analysis techniques with structural equation models and partial least square techniques. The analysis shows that anchoring and herding influence on stock investment decisions. However, the disposition and overconfidence bias does not affect investment decisions. This result implies that young investors are aware of their emotional bias in making stock investment decisions. Before making an investment decision must analyze the information. This research is expected to contribute to behavioral finance in emerging capital markets, especially studies related to individual behavior bias. Keywords: Behavioral bias, herding effect, anchoring, overconfidence, disposition effect