The Influence of Cognitive Bias Moderated by Demographic Factors and Re-Moderated by Education and Income on Individual Investment Decisions

Elva Herlianti, Nugraha Nugraha, Disman Disman, Yayat Supriatna

Abstract


Understanding the causal relationship between cognitive biases and investment behavior is essential to develop strategies to mitigate their negative impacts. This study aims to extensively examine the impact of cognitive biases on individual investment decisions. The population consists of 600 individual investors, with 574 respondents included in the sample. The main effects are analyzed using multiple linear regression, and the moderation-moderation model is tested through Model 3 in the PROCESS Procedure for SPSS 26 by Hayes. The results show that Herding bias has a negative effect, which makes investors reluctant to follow market trends, while Loss Aversion, Framing bias is moderated by demographic factors, namely gender and age, which are moderated by Education and income. These findings imply that demographic factors do not interact together but operate independently to influence investment behavior. This study is novel in its exploration of the moderating and back-moderated effects to uncover the interaction between cognitive biases and demographics in shaping investment decisions.

Keywords


Herding, Loss Aversion, Framing, demographic factors

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References


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DOI: https://doi.org/10.17509/jbme.v10i1.82693

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