Cognitive Bias and Risk Preferences Analysis of Ponzi Scheme Investors
Maya Sari, Nugraha
Universitas Pendidikan Indonesia
This study aims to gain an overview of cognitive bias, risk preference and investment decisions of Ponzi Scheme Investors and to examine the influence of cognitive biase and risk preferences toward investment decision. The cognitive bias studied includes overconfidence, availability heuristic, and herding while the risk preference parameter used is risk tolerance. The respondents consisting of 115 investors who were ponzi scheme investment actors, are taken using purposive sampling method. The verificative analysis used is multiple linear regression. The result shows that belief in the form of over confidence, availibility heuristic, and herding are the principal basis in processing information to make financial decisions. The risk tolerance of the investors also show a high level category indicating that the respondents are relatively easier to make high-risk investments. Overconfidence, availability heuristic, herding and risk tolerance, have a positive and significance influence toward investment decision.
Topic: Financial Management and Accounting