THE INFLUENCE OF EMOTIONAL INTELLIGENCE ON EMOTIONAL BIASES IN INVESTMENT DECISION: CASE OF INDONESIA’S EARLY INVESTORS

• Main Author: Amalia Rizky (NIM 19014066), Novia
• Format: Final Project
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/23535
• Institution: Institut Teknologi Bandung

Behavioral finance comes as a theory that adds value for psychological aspects in finance and opposite the traditional finance thinking that individuals always act rationally. When making decisions in uncertainty, emotion is a major psychological aspect that plays a major role in decision-making. The dominating emotions can trigger irrational behavior and cause behavioral <br /> <br /> bias. Emotional intelligence is associated with the ability to process and control the emotions that arise in every situation. With the existence of emotional intelligence, investors are expected to control the emotions arising from the uncertainty that occurred in the stock market. This study aims to find out the relationship of emotional intelligence in reducing bias tendency when making decisions. There are five dimensions of emotional intelligence measurement by Goleman used in this study including self-awareness, self-management, motivation, empathy, and relationship management. While the bias is focuses on biases caused by emotional or emotional bias including endowment bias, self-control bias, optimistic bias, loss aversion bias, <br /> <br /> and regret aversion bias. Logistic regression method is used to test all variables in the study. The online questionnaire was designed as a data collection tool, with 147 respondents collected to be sampled which are early investors in Indonesia. The results in this study shows that the tendency of bias in decision-making by early investors in Indonesia is quite strong. Despite having high emotional intelligence, most of investors are proven to act irrationally and taking biased in investment decisions. The results of this study also found some emotional intelligence factors, motivation and empaty, that proved to have an influence on some emotional bias tested. While other emotional intelligence factors include awareness, self management, and relationship management are not proven to have a significant <br /> <br /> <br /> <br /> influence on reducing bias tendencies in decision making