Behavioural Biases of Overconfidence and Disposition Effect and their Impact on Investment Decision in the Indonesian Capital Market

DOI

10.2991/icoi-19.2019.20How to use a DOI?

Keywords

disposition effect, investment decision, overconfidence

Abstract

The Odean methodology revealed that investors are more susceptible to realizing profits than losses as indicated by disposition effects. This study intended to analyze the effect of overconfidence bias and the disposition effect on investment decisions in Indonesia. The sampling method was purposive sampling, with the respondents being 40 young investors who were members of Club Investors. Data collection was done by distributing questionnaires. The analysis method in this study was quantitative analysis. The analytical tool used was binomial regression analysis and multiple linear regression. Binomial regression was used to discover investor behavior and whether it tended to be biased or rational in its investment decisions. After discovering the attitude of the investors, be it biased or rational, the effect of the bias was analyzed using multiple linear regression. A multiple linear test was used to predict the probability of influence of each investment decision variable. The results showed that overconfidence had an effect on investment decisions. Some investors tend to experience an overconfidence bias in decision making, which shows that the investors feel very confident in their experience and ability to choose stocks. The investors believe that the results will be in line with their expectations.

Copyright

© 2019, the Authors. Published by Atlantis Press.

Open Access

This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).

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TY  - CONF
AU  - Ica Rika Candraningrat
AU  - A Sakir
PY  - 2019/10
DA  - 2019/10
TI  - Behavioural Biases of Overconfidence and Disposition Effect and their Impact on Investment Decision in the Indonesian Capital Market
BT  - Proceedings of the 2019 International Conference on Organizational Innovation (ICOI 2019)
PB  - Atlantis Press
SP  - 109
EP  - 115
SN  - 2352-5428
UR  - https://doi.org/10.2991/icoi-19.2019.20
DO  - 10.2991/icoi-19.2019.20
ID  - Candraningrat2019/10
ER  -