Behavioral Biases in Influencing Generation Z Investment Decisions: The Moderating Role of Financial Literacy

Abstract

The purpose of this study was to determine the effect of representativeness bias, herding bias and regret aversion on investment decisions with financial literacy as a moderating variable. The population in this study were Generation Z Investors in Semarang City. The number of samples used in this study were 98 Generation Z Investors in Semarang City. The data collection method used a questionnaire. The results showed that there was a positive and significant effect of representativeness bias, herding bias and regret aversion on investment decisions. The results also show that financial literacy as a moderating variable is able to moderate the influence of representativeness bias and herding bias on investment decisions, but financial literacy cannot moderate the influence of regret aversion on investment decisions. Suggestions that can be given are that investors can continue to develop knowledge and abilities to analyse financial information by attending educational training or investment-related seminars provided by accredited parties so that investors avoid making irrational decisions that can be detrimental in the future.