THE INFLUENCE OF PERSONALITY TOWARDS RISK TOLERANCE AND HEURISTIC BIAS AND ITS IMPACT ON INVESTOR’S DECISION MAKING

Abstract

Purpose – The purpose of this paper is to focus on finding the influence of personality towards risk tolerance and heuristic biases, and it’s impact on investor’s decision making in the context of every investor have different experience in investing influenced by their psychology factors as the phenomena. Design/Methodology/Approach – This research used quantitative method with online questionnaire created using Google Form as the instrument and spread online through Line, WhatsApp, and Instagram. The data collected uses purposive sampling technique with the total of 212 individual investors as respondents who have ever invested in stock, forex, bonds, and mutual funds. Findings – The result shows the influence of personality towards risk tolerance and heuristic biases and the influence of risk tolerance towards investor’s decision making have a significant relation. While, the influence of personality towards investor’s decision making and the influence of heuristic biases towards investor’s decision making have no significant relation. Originality – Value of this research is the development of theory and implication of psychology factors on investor’s decision making.