The Influence of Behavioral Bias, Cognitive Bias, and Emotional Bias on Investment Decision for College Students with Financial Literacy as the Moderating Variable

Abstract

The investment gives an important moment for the economy of individuals. In making an investment decision, someone must act rationally and not rarely also be irrational. The purpose of this research is to know the influence of behavioral bias, cognitive bias, and emotional bias on investment decision, with financial literacy as a moderating variable. The sample is used 212 respondent from a college student in Investment Gallery Surabaya, using a detailed questionnaire, limited interview, and multiple regression analysis. The result obtains suggest that herding bias, risk perception, overconfidence, representativeness, and financial literacy have an effect significantly to an investment decision. While disposition effect and experience regret not to affect significantly to the investment decision. Financial literacy is not a moderating variable, but an independent variable. Financial literacy can't moderate herding bias and overconfidence to the investment decision. The result about research shows that college student in Surabaya in making investment decision base on advice from broker or friends and experience in other investment financial instrument in the past, and use information from magazine or news online dor investment decision. This study is based on decision theory, herding theory, behavioral finance theory, and prospect theory.

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