DO MILLENNIAL INVESTORS MAKE RATIONAL INVESTMENT DECISIONS? EFFECTS OF BEHAVIORAL BIAS AT THE INDONESIA STOCK EXCHANGE (IDX)

Abstract

Objective: This study aims to identify the influence of behavioral biases, including representativeness, anchoring, overconfidence, and herding, on investment decision-making by millennial investors on the Indonesia Stock Exchange (IDX) in Jakarta. This study contributes to the literature and uncovers the decision-making patterns of the millennial generation.

Methodology – This study used questionnaires completed by 145 active millennial investors on the IDX. Analytical techniques used included reliability testing, descriptive statistics, correlation analysis, and hierarchical regression to measure the impact of behavioral biases on investment decisions.

Findings – The results indicate that all four types of behavioral biases significantly influence millennial investors' investment decisions. Most investors exhibited a tendency to make irrational decisions due to fluctuating emotions and a lack of interest in learning.

Limitations – This study only covers young investors in the Jakarta area and four types of bias, so the results cannot be widely generalized.

Practical Implications – Millennial investors can make more rational decisions by increasing literacy, conducting research, delaying decisions, and reducing external influences.

Originality/Value – This study is unique in that it focuses on Jakarta’s millennial generation and tests four behavioral biases simultaneously.