Analysis Behavioral Financial Bias in Invesment Decision Making

Abstract

Traditional finance suggests that any investment made by a rational investor considers risk and return before making a decision to maximize return. Behavioral finance then challenges conventional finance and introduces psychological factors that influence decision-making on invesment. The purpose of this study is to investigate how behavioral biases affect investment decisions under. Relying on variables to make investment decisions is a complex activity that relies on individual resources. Based on this research, In this study examine the impact of alternative investment decisions by human rational and irrational behavior and then examine the impact of behavioral finance on the decision-making process. behavioral financial phenomenon variables; heuristics, prospect theory, Role of personality, and environmental factors are explored as part of this study. Overconfidence, representativeness, anchoring, regret avoidance, hindsight, the harding effect, and home bias are inherent in investor psychological behavior. A research questionnaire tool for collecting samples and conducting quantitative research. To test the hypothesis regression analysis performed by the SPSS as a result. We found that investment decisions are influenced by behavioral bias. Empirical results concluded that investment decisions are influenced more by heuristic behavior than by prospect theori or role of personality. The results showed that heuristic behavior, prospect theories and the role of personality. Significantly influences investment decisions. With this research, it is hoped that it can help novice investors who will make an investment and to other researchers in the financial institutions.