Regret Aversion Bias, Mental Accounting, Overconfidence, and Risk Perception in Investment Decision Making on Generation Y Workers in Yogyakarta

International Journal of Economics and Management Studies

© 2019 by SSRG - IJEMS Journal

Volume 6 Issue 7

Year of Publication : 2019

Authors : Sukmawati Sukamulja, Anastasia Yoan Noor Meilita Dewi Senoputri

10.14445/23939125/IJEMS-V6I7P116

How to Cite?

Sukmawati Sukamulja, Anastasia Yoan Noor Meilita Dewi Senoputri, "Regret Aversion Bias, Mental Accounting, Overconfidence, and Risk Perception in Investment Decision Making on Generation Y Workers in Yogyakarta," SSRG International Journal of Economics and Management Studies, vol. 6,  no. 7, pp. 102-110, 2019. Crossref, https://doi.org/10.14445/23939125/IJEMS-V6I7P116

Abstract:

In traditional finance theory, the investors are expected to be rational decision makers going along with the expected utility theory. Behavioral finance, in contrary to this, heavily criticize this rational perspective and they argue that the investors tend to deviate from rationality whenever making investment decisions. Nowadays investors often make investment decision irrationally. The decision is often based on their judgment that is far away from rational assumption. When investors face risky situation, there are some objectivities, emotions, and other psychological factors that usually affect their decision making. The purpose of this paper is to study and describe several biases in investment decision-making through the review of research articles in the area of behavioral finance. The study includes behavioral finance patterns of Y generation that will be an independent variables are regret aversion bias, mental accounting, overconfidence, and risk perception to the Y generation on how they will make an investment decision. This study used purposive, convenience and snow-ball sampling method. There are 100 respondents taken from questionnaire by survey method. To test hypotheses, this study employs descriptive analysis and multiple regression analysis. Moreover, by performing multiple regression analysis, this study found that only overconfidence and risk perception have significant effect on investment decision making, but experienced regret, and mental accounting do not.

Keywords:

Investment Decision Making, Regret Aversion bias, Mental Accounting, Overconfidence, Risk Perception.

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