Herding Behavior, Overconfidence, and Risk Tolerance on Investment Decisions in Gen Z
Keywords:
Herding Behavior, Overconfidence, risk tolerance, investment, gen zAbstract
The primary objective of this study is to examine the influence of herding behavior, overconfidence, and risk tolerance on investment decisions. This research employs a quantitative approach using Structural Equation Modeling (SEM). The sample consists of 400 investor respondents in South Jakarta. The findings of this study indicate a positive and significant influence of herding behavior, overconfidence, and risk tolerance on investment decisions. These findings reinforce behavioral finance theory. Specifically, the results show that herding behavior, overconfidence, and risk tolerance contribute to individual behavioral biases when interpreting, processing, and making decisions based on information. These biases, which may also arise from the use of emotions and spontaneity in responding to information, are consistent with the two major categories in behavioral finance. This study offers a new contribution by comprehensively analyzing the interaction between herding behavior, overconfidence, and risk tolerance as factors influencing investment decisions.
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