Homo Economicus Research Articles

PEMBENTUKAN PORTOFOLIO OPTIMAL DENGAN MODEL INDEKS TUNGGAL PADA SAHAM IDX BUMN 20 DI BEI

Abstract: At the beginning of 2020, the COVID-19 pandemic caused by Severe Acute Respiratory Syndrome Coronavirus-2 (SARS-CoV-2) hit the world, including Indonesia. The COVID-19 protocol policy implemented to break the chain of virus spread has limited business activity, resulting in a decline in the performance of issuers. However, this situation actually triggered an increase in the number of investors in the capital market, who saw an opportunity to shift investment activities to stock trading as an alternative income. This phenomenon shows that the capital market is increasingly in demand even amidst the uncertainty of the pandemic. Stock investment involves analysis of the returns and risks associated with financial assets. Rational investors try to choose efficient shares to maximize returns with minimal risk. The Indonesian Stock Exchange (BEI) provides stock indexes to help investors, one of which is IDX BUMN 20, which includes 20 shares of State-Owned Enterprises (BUMN), Regional-Owned Enterprises (BUMD), and their affiliates. BUMN shares are considered safer because they are managed by the state, have high liquidity, and often distribute dividends to shareholders. This research aims to analyze the optimal portfolio formation of IDX BUMN 20 shares using a single index model during the 2021–2022 period. It is hoped that the results of this research will provide insight for investors in making rational investment decisions and maximizing profits with controlled risks. Keywords: Investment, Stocks, Capital Markets, Index IDX BUMN 20

Studying investor rationality on stock price: A case of Bank Syariah Indonesia

Purpose – This study aims to analyze the behavior of investors' investment decisions, as reflected in the volatility of stock prices, especially at PT Bank Syariah Indonesia Tbk (BSI). The analysis here compares aspects of rationality and irrationality as well as their relationship with the stock prices of Bank Syariah Indonesia.Methodology – This study uses the Autoregressive Distributed Lag (ARDL) method to test aspects of rationality proxied by Price-to-Book Value (PBV) and Price-to-Earnings Ratio (PER), while aspects of irrationality proxied by mood sentiment (SWAV). Data were collected from February 2021 to February 2024 on a monthly basis, resulting in 37 research samples.Findings – The results show that PBV, PER, and mood sentiment have a significant effect on BSI stock prices. In the long term, PBV has a positive effect, while PER and mood sentiment have negative effects on BSI stock prices. In this situation, mood sentiment has the greatest influence on BSI stock prices, indicating that the volatility of BSI stocks is driven by irrationality.Implications – As the stock price is driven mostly by irrationality, investors must have fundamental and macroeconomic analysis skills as well as expertise when buying and selling stocks in order to minimize losses due to the irrational behavior. In addition, regulators and companies must provide transparent and accurate information to investors to reduce the irrational behavior.Originality – This study modifies the objective of Islamic banks’ stock prices in Indonesia by elaborating rational and irrational factors as the determinants of stock prices.

Safe havens for Bitcoin and Ethereum: evidence from high-frequency data

Investing in cryptocurrencies is progressively becoming a norm; however, these assets are excessively volatile and often decrease or increase in value instantly. Thus, rational investors holding cryptocurrencies for extended periods firmly search for assets that can diversify their risk, preferably with assets other than cryptocurrencies. In this study, we consider the two most studied cryptocurrencies with the highest capitalization and trading volume/value, namely Bitcoin and Ethereum. Specifically, we examine whether high-performing leading US tech stocks (Facebook, Amazon, Apple, Netflix, Google [FAANG]) can provide any diversification benefits to cryptocurrency investors. To do so, we employ dynamic conditional correlation (DCC), asymmetric DCC, time-varying parameter vector autoregression-based connectedness measures, dynamic correlation-based hedge and safe-haven regression analyses, portfolio optimization and hedging strategies, time- and frequency-based wavelet coherence, and high-frequency 10-min intraday data from January 1, 2018 to January 31, 2023. We find that FAANG stocks can be considered (at least weak) safe havens for Bitcoin and Ethereum during the sample period. Our subperiod analyses reveal that the safe-haven role of FAANG stocks, specifically for Bitcoin, has noticeably increased. While the safe-haven property of Facebook is the most promising, for Netflix it is blurred between a weak–safe-haven and a hedge. Our findings may help investors, policymakers, and academicians to invest in cryptocurrencies, formulate relevant investment guidelines, and extend the literature on cryptocurrencies, respectively.

The Relationship Between Investor Sentiment and Chinese Stock Prices

We use data from 2003 to 2023 to investigate the effect of investor sentiment on Chinas stock market. First, we find a positive correlation between investor sentiment and stock market prices: when investor sentiment is higher, market prices tend to rise, while lower investor sentiment tends to decrease market prices. Our research can help enhance investors understanding of the stock market. Individual investors and researchers may more accurately predict short-term and long-term trends by analyzing the relationship between investor sentiment and stock market prices. Furthermore, our paper aims to improve investors risk awareness and promote a rational investment approach. With more investor education, investors can assess market fluctuations more rationally and avoid blindly following trends or panic selling, thereby contributing to market stability. Moreover, by acknowledging the influence of sentiment on market behavior, policymakers and regulators can better anticipate market reactions to various stimuli and devise more effective interventions to mitigate potential market disruptions.

Monte Carlo Simulation Forecasting the Prices of Selected Stocks in the Automotive Sector

Investors are exposed to risk and uncertainty because of changes in financial markets’ prices. Investors perceive the risks associated with changes in the market prices as higher due to inaccuracy in predicting future returns because of fluctuations in prices. For this reason, they adopt different risk management methods that reduce or eliminate these risks. This research relies on Monte Carlo Simulation technique in predicting forthcoming yield rates from three companies operating under Turkish automotive segment namely, Dogus Automotive (DOAS), Tofas (TOASO) and Ford Otosan (FROTO). The simulation, which runs from January 1, 2023, to December 31, 2023, gives investors research-based insights that help them make strategic investment choices in times of high volatility in the market. According to the results, by modeling prospective future scenarios, MCS can be employed as a viable means of predicting stock prices in financial markets which subsequently helps people make rational investments thereby securing profitable ventures. Furthermore, this study offers practical suggestions in the form of MCS-generated volatility ranges. Investors can determine when it is advisable to buy or sell stocks in order to reduce potential losses and increase profits by setting realistic price objectives and allocating the portfolio differently in accordance with these calls.

Perceptions Towards Behavioral Finance Among Investors in Banking Industry: Evidence from Nepal Bank Limited

The purpose of this article is to investigate the attitudes that investors in the banking industry have towards behavioural finance for the purpose of gathering evidence from Nepal Bank Limited. In collaboration with Nepal Bank Limited, the purpose of this study is to investigate the implications of behavioural biases on investment decisions in the banking business. In the context of rational investment decision making on the stock market, the investigation of cognitive biases and emotional biases is measured. After careful consideration, the ontological research philosophy that employs interpretivism research philosophy has been chosen. The researcher has been hired with a semi-structured interview with three investors in the banking business with reference to the Nepal Bank Limited. The data analysis has been done qualitatively using theme analysis. This article presents the findings of the interview. All of the codes were arranged into categories, and themes were discovered. According to the findings of the study, the most common types of behavioural biases that investors in the banking business exhibit are cognitive biases and emotional biases. The evidence for this was obtained from Nepal Bank Limited. Both fundamental and technical analysis were utilised to determine how the outcomes of the study influenced the NBL stock market. In doing so, it brought to light arbitrage possibilities that arise from the psychological and behavioural flaws of investors. These biases include representativeness, availability biases, optimism, overconfidence, and herding behaviour. Because of these biases, individual investors in Nepal Bank Limited were impacted in both their opinions and their behaviour. When it comes to the emotional biases, investors are impacted by psychological and mental accounting, ambiguity aversion, and self[1]control when it comes to making investment decisions in the banking business, as evidenced by Nepal Bank Limited (NBL). The focus of this study is on individual investors; however, it is possible that future research paths may concentrate on institutional investors in the banking industry, supported by evidence from Nepal Bank Limited.

The Big 5 personality traits and investment biases: the role of financial literacy

PurposeThis paper investigates the associations among the Big 5 personality traits (neuroticism, conscientiousness, agreeableness, openness to experience and extroversion), nine prominent investment biases and the moderating role of financial literacy.Design/methodology/approachWe used survey data from 475 individual investors in India based on various benchmarked scales in the literature and structural equation modeling to evaluate the desired relationship between the constructs.FindingsOur evidence shows that the extroversion personality trait is the most vulnerable to behavioral biases, and overconfidence bias affects individual Indian investors the most. Financial literacy is positively associated with two biases (risk aversion and representativeness bias) and moderates the relationship between two personality traits (extroversion and agreeableness) and risk aversion.Research limitations/implicationsOur study has limitations. First, it does not examine financial literacy in detail. Therefore, researchers should examine financial literacy within larger frameworks than those used in our study. Second, we confined our analysis to the Big 5 personality traits and nine behavioral biases. Our selection of biases to include in the study involved some subjectivity. Third, we limited our analysis to Indian investors. Researchers should replicate our study to see if its findings are generalizable in other countries with differing characteristics. Our findings call for a more careful examination of the circumstances behind which personality traits manifest in specific bias.Practical implicationsInvestment advisors can help their clients make rational investment decisions by guiding them to deal with their investment biases.Social implicationsImproving financial literacy could help investors avoid the pitfalls of behavioral biases and increase their performance in the stock market.Originality/valueThis study is the first to provide a comprehensive framework that examines the relationship between personality traits and investor biases and the moderating role of financially literate investors.

Efek Moderasi Masa Perikatan Audit Pada Hubungan Fee Audit dan Kualitas Audit: Uji Peran Perilaku Oportunistik

Based on the agency perspective, the individual is a rational economic man who seeks to optimize his personal interests. Optimization of personal interests along with opportunistic behavior has the potential to reduce audit quality. The aim of this study is to investigate the interaction effect of audit tenure on the audit fees and audit quality relationship. This study uses a quantitative method involving financial companies listed on the Indonesia Stock Exchange as a research sample. The literature is still limited in considering the positive impact of fees and audit tenure on audit quality. However, based on an agency perspective, this study shows that the existence of individual opportunistic behavior is the fundamental reason that aspects of the fee and audit engagement period have the potential to reduce audit quality. The findings of this study also indicate that the audit tenure moderates the effect of audit fees on audit quality. This research contributes to the audit quality literature that audit fees and engagement tenure can be two sword because apart from being able to improve audit quality, in the long term it has the potential to reduce audit quality.

After Economics’ “Discovery” of Homo socialis: Decolonial Vigilance and Interpretive Collaboration

Current intellectual calls for more socially minded governance often resort to the authority of the experimental and behavioral economists who have provided uncontroversial evidence for the generalized existence of a Homo socialis. For a qualitative social researcher, the narrative of a “discovery” makes little sense. This article provides a more meaningful account of the experimental rationale of prosocial preferences research, interrogating, from a “decolonial” theoretical perspective, the epistemic and normative implications of a method that persuasively claims to have challenged the intellectual imperialism of Homo economicus. Just as the colonial discourse that speaks of the “discovery” of America has shaped the global Eurocentric mentality that splits the world into hierarchical binaries, the academic discourse that speaks of the “discovery” of Homo socialis could reinforce a behavioral range that reduces the interpretation of non-prosocial choices to a binary spectrum still metrologically organized around Homo economicus. The danger is that Southern subjects do not always have the privilege of feeling prosocial and could be penalized for their disadvantage within a socially minded mode of governance. To address this danger, the article argues, experimental social scientists need to become qualitatively attuned to the methodological question of “range validity” beyond the traditional one of “external validity.”

Mycoremediation’s Material Imaginaries

This article explores what mushrooms do in human projects and specifically what they do in a conversation and context framed by neoliberalist rationality. We highlight two forms of neoliberal rationality—homo economicus, or “the economic man,” and consumptive sovereignty—that often shape the way people interact with fungi in the post-9/11 United States. Through establishing the role of neoliberal rationality in mediating engagements with fungi, we examine how such rationality operates and configures metabolic exchanges between humans and fungi, and between humans and metabolic processes more broadly. We close by considering mycoremediation, the biological process of fungi metabolizing toxic compounds. Our goal is to reveal how dominant forms of reason work to direct human action, and in turn how those repeated actions structure our lives. We hope to disrupt reproductions of these logics by turning our ear to other networks we see operating beneath the surface: posthumanist theory and fungal life.

How Does Loss Aversion Mediate the Relationship Between Personality Traits and Efficiency of Skills in Investment Decision- Making?

This study examines how loss aversion mediates the connection between personality factors and the effectiveness of investment decision-making skills among individual investors at the Colombo Stock Exchange. This research challenges the neoclassical paradigm that presumes investor rationality. Instead, it accords with behavioural finance, which emphasizes deviations from rationality in both beliefs and preferences. Using Prospect Theory as a framework, this study examines how the five major personality traits -conscientiousness, extraversion, agreeableness, neuroticism, and openness to experience influence investment decision-making. Analyzing data from 351 investors, a structured questionnaire and purposive sampling were used. The analysis was conducted using Structural Equation Modelling with SmartPLS4. The results demonstrate notable correlations: individuals with a higher level of openness to experience and agreeableness tend to have a positive impact on their investment decision-making, whereas extraversion, openness to experience, and conscientiousness are highly associated with loss aversion. Loss aversion plays a crucial role in connecting extraversion, conscientiousness, and openness to experience with investment decision-making. This study enhances the field of behavioural finance by providing a detailed understanding of how personality traits and loss aversion influence investing choices.

Cooperation through rational investments in social organization

Repeated interactions and contractual agreements are examples of different ways of organizing interactions in social and economic life and can foster cooperation in social dilemmas. Thus, when involved in social dilemmas, actors have incentives to form long-term relations with repeated interactions or to enter into contractual agreements. We analyze theoretically and experimentally the effects of repeated interactions and contractual agreements as well as their endogenous emergence. In line with earlier evidence, both ways of organizing interactions are found to foster cooperation. Our key contribution is twofold. First, with respect to theory, we derive conditions for investments in social organization. Second, empirically, we find that such investments are more likely when the costs are below a threshold that follows from a parsimonious game-theoretic model assuming equilibrium behavior, self-regarding preferences, and complete information. We find less experimental support for two additional conjectures on investments that are based on reasoning more in line with behavioral game theory.

The Fashioning of the Homo Economicus (Economic Citizen): Reflections on Migration and Integration

ABSTRACT This paper critically explores what is meant by integration and the expectations that come with it, and how the ‘right’ kind of economic citizen (homo economicus – defined as the subject of neoliberalism) gets produced through social work practice with immigrants. Specifically, this paper engages in critical reflection on a participant's narrative that is derived from a larger study by probing the expansion of immigrant selection in Canada, the policy of multiculturalism as Canada's most recognized policy as it pertains to integration, and how they coalesce and shape settlement work with immigrants. This paper concludes with a discussion on how to begin to address concerns that surround social work practice with immigrants by way of (a) critical interrogation of neoliberal discourse especially how the interlocking architecture of individualism and capitalism have developed to shape how social workers are positioned and newcomers are constructed (i.e. made into a neoliberal subject); (b) how this could promote the discourse of integration through practice that is embued in discourses of pathology; and (c) how to incorporate social work interventions that are policy related and situated at a macro-systems level.

Updating neoclassical economics with contemporary conceptions of homo economicus: a bibliometric analysis

AbstractThe postulation of rationality pervading neoclassical economics, having found to be lacking in veracity, necessitates an update of Homo economicus in neoclassical economics. An empirical formulation of economics predicated on an evolutionary framework of cognitive development is widely akcnowledged to expand the application and utility of economic models and this study identifies the key research areas associated with the contemporisation of neoclassical economics and reviews the extant body of knowledge on the status of the endeavour. A co-occurring keyword procedure is used to perform a bibliometric analysis to evaluate the extent to which the body of knowledge has progressed with updating the conception of Homo economicus in neoclassical economics. Data obtained from the Scopus and Web of Science databases are subjected to treatment by the procedure which ultimately reflects the relevance and quantity of research output related to the objective of updating neoclassical economics. The results show that, apart from the area of cognitive biases, the research contribution from the identified focus areas are insufficient with 14 of the 18 fields contributing only 12% of the research ouput related to the updating of neoclassical economics. The key insight of this study is that while the failures of neoclassical economics have been well documented in the literature, the effort to improve economic predictions to better approach reality by updating the characterisation of Homo economicus with evidence based findings relating to human behaviour is still immature. It is recommended that the computational and analytical tools endowed by the digital revolution be employed to close the research gap enabling the creation of debiasing strategies and acucrate economic predictions.

Decoding Investor Sentiments in the Indian Stock Market: A Structural Equation Modelling Approach

Background of the study This research examines how psychological and social biases affect individual investors’ investing decisions. Investor sentiment significantly influences financial markets, frequently causing stock prices to deviate from their intrinsic values. In rising economies such as India, where retail investors are significantly affected by psychological factors, comprehending these attitudes is crucial. Methods This study analyses data from a comprehensive questionnaire that was conducted throughout the nation and included 552 retail investors. The investigation employed structural equation modelling (SEM) to identify the elements that influence the decision-making of individuals who invest in the Indian stock market. Findings The research offers insight on the influence that investor attitude has on investment decision-making as well as the factors that precede it. The study demonstrates that investors make financial decisions based on sentiment. In addition to assessing the efficacy of the Indian financial market, this study sought to ascertain the rationality of investors’ choices by exploring the factors that influence their decision-making process. Conclusion The outcome of the study shows that information seeking, anchoring, herding, representativeness, and overconfidence all have a big impact on investors. Moreover, the study has proven investors’ irrationality and stock market inefficiency. The findings may be employed to further examine the trading practices of international investors and encourage further study in the field of behavioural finance.

Effective environmental strategy or illusory tactics? Corporate greenwashing and innovation willingness

AbstractCorporate greenwashing is an unethical environmental strategy that has received extensive attention from practitioners and academics; however, little is known about its influence on innovation willingness. The purpose of this study is to fill this important gap by exploring the influence mechanism of corporate greenwashing on innovation willingness through underperformance duration. Drawing on resource‐based theory, Homo economicus, and performance feedback theory, this study uses data of 610 Chinese A‐share listed heavily polluting companies (3819 company‐year observations) from 2013 to 2019. The results show that there is a significant inverted U‐shaped relationship between corporate greenwashing and innovation willingness, with underperformance duration partially mediating this relationship. The findings advance our understanding of the non‐economic consequences of corporate greenwashing, enrich the literature on corporate greenwashing and innovation willingness, and offer valuable insights for interdisciplinary studies between environmental strategy and corporate innovation. Practical implications provide policymakers with recommendations on how to prevent corporate greenwashing in environmental responsibility.

The Right to Development and Self-Help: Faking Entrepreneurship of the Strategic Economic Man in Mohsin Hamid’s How to Get Filthy Rich in Rising Asia

ABSTRACT This article highlights the strategic economic man in Mohsin Hamid’s How to Get Filthy Rich in Rising Asia. The novel reveals the contradictions of faking entrepreneurship amid the uneven development in rising Asia, showcasing individuals’ efforts for self-improvement despite political, socioeconomic, and cultural challenges. This faking fosters a new global identity that is sociable, emulative, altruistic, and cooperative as the economic man is reconciled with the sociological man, who learns from others through reading, imitation, and other interactive strategies. Ultimately, the novel suggests that maximizing benefits for personal development and the common good requires merging these two aspects of identity.

Beyond the myth: understanding women's impulsive retail footwear shopping

PurposeThis research focuses on common misconceptions about the factors driving women to purchase footwear impulsively. Its primary objective is to explore how emotional and social triggers specifically influence women's purchasing decisions, contrasting with the traditionally rational consumer models.Design/methodology/approachAn online questionnaire was administered to a sample of women, yielding 199 useable responses.FindingsThe findings reveal the key determinants of women's impulsive retail footwear purchases, which include self-regulation, hedonic motivations and the influence of the retail store environment. This research challenges the prevailing assumption that women's passion for shopping is driven solely by inherent characteristics and suggests that external factors substantially shape their impulsive buying behaviour. In summary, the stereotypical portrayal of women as compulsive retail footwear shoppers may result more from external stimuli and environmental factors rather than an intrinsic trait.Originality/valueThis study improves the existing knowledge of women’s impulsive buying behaviour by unveiling the determinants of women's impulsive footwear purchases and assessing whether prevailing stereotypes hold true.

SIMULATION OF THE INFLUENCE OF THE INVESTMENT ENVIRONMENT ON THE FORMATION OF AN ATTRACTIVE MACRO SPACE OF THE ECONOMY OF UKRAINE

The economic situation in most countries demonstrates an ever-increasing demand for investment resources while their supply is significantly limited. A system of factors characterized by multidirectional action forms the so-called investment environment in the country. Its structure and level of efficiency are crucial determinants for ensuring the sustainable economic development of a country. The purpose of the study is to substantiate scientific and practical recommendations for the formation of a highly efficient macro-space of the economy of Ukraine based on the implementation of rational investment policy measures. In the course of this research, an analysis of foreign investment volumes in Ukraine was conducted, and a list of factors ensuring the positive investment image of the country in the international arena was identified. The result of the study is constructed trend lines of GDP dependence on direct foreign investors in Ukraine and abroad, as well as trend lines of GDP dependence on the level of the tax burden and the integral indicator of the level of the shadow economy; the delineation of the main directions for forming an investment environment in the context of attracting foreign capital investments. The priority vectors of optimizing the investment environment in Ukraine are substantiated and the main problems of Ukraine's investment attractiveness as a motivational factor for investment activity are determined. The strategic directions for the development of investment attractiveness of the national economy under modern business conditions have been justified. The methodological basis of the research consists of a systematic, comprehensive, and evolutionary approach. The main scientific results of the study were obtained through the use of methods such as structural-logical analysis, theoretical generalization, comparative analysis, structural-functional analysis, and a comprehensive approach based on identifying cause-and-effect relationships, as well as logical, economic and mathematical modelling, analytical, and graphical methods.

Evaluating robo-advisors through behavioral finance: a critical review of technology potential, rationality, and investor expectations

The mini review assesses the value propositions of robo-advisors through the lens of behavioral finance. Despite their promise of data-driven, rational investment strategies, robo-advisors may not fully replicate the personalized service of human financial advisors or eliminate human biases in decision-making. A content analysis of 80 peer-reviewed articles and publications was conducted, focusing on the intersection of financial technology and behavioral finance. Literature was retrieved using The Chicago School University Library's OneSearch and the EBSCO host database, with key terms including “robo-advisor,” “investment behavior,” “risk tolerance,” “financial literacy,” and “affective trust.” The review identifies four key limitations of robo-advisors: (1) their inability to replicate the service-relationship of human advisors; (2) the presence of human bias in supposedly rational algorithms; (3) the inability to minimize market risk; and (4) their limited impact on improving users' financial literacy. Instead, robo-advisors temporarily compensate for a lack of financial knowledge through passive investment strategies. The findings suggest that integrating behavioral finance principles could enhance the predictive power of robo-advisors, though this would introduce additional complexities. The review calls for further research and regulatory measures to ensure that these technologies prioritize investor protection and financial literacy as they continue to evolve.