The Effect of Cognitive Bias on Investment Decision Making by Individual Investors: Behavioral and Financial Accounting Approaches

Andrye Theo Prathama

Abstract


This study aims to analyze the influence of cognitive bias on investment decision-making by individual investors in the Indonesian capital market. In the framework of behavioral and financial accounting, biases such as overconfidence, anchoring, and herding behavior often affect investor rationality. This study used a quantitative approach by distributing a questionnaire to 150 active individual investors. The results of the regression analysis showed that overconfidence and herding bias had a significant influence on investment decision-making, while anchoring had no significant effect. These findings show the importance of financial education and psychological awareness in improving the quality of investment decisions.


Keywords


Behavioral Accounting, Cognitive Bias, Investment Decisions, Behavioral Finance, Individual Investors

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References


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