The Effect of Overconfidence Bias, Risk Tolerance, and Herding Bias on Stock Investment Decisions with Financial Literacy as a Moderation Variable

Abstract

This study aims to analyze the effect of Overconfidence Bias, Risk Tolerance, and Herding Bias on Stock Investment Decisions with Financial Literacy as a Moderating Variable. The subjects in this study were: (1) Students aged >17 years to 27 years, (2) having financial assets in the stock sector, (3) had done trading, and (4) domiciled in DIY, (5) or joined KSPM (Capital Market Study Group). KSPM members were chosen as research subject because they are considered as individuals who understand more about stocks and follow the development of the capital market. In this study, the sample amounted to 120 respondents selected using purposive sampling analysis technique, then the data was processed using the SPSS 25 software. Data were collected through a survey by distributing questionnaires online via Google Form to various social media platforms such as WhatsApp, line, telegram, Instagram, and twitter (now X). Based on the analysis that has been done, the results show that Overconfidence Bias, Risk Tolerance, and Herding Bias have a positive and significant effect on stock investment decisions, while Financial Literacy moderates a negative and significant effect on the influence of Overconfidence Bias, Risk Tolerance, and Herding Bias on stock investment decisions. Keywords: Overconfidence Bias, Risk Tolerance, Herding Bias, Financial Literacy, Investment Decisions