EMPIRICAL EVIDENCE OF DISPOSITION EFFECTS IN MAKING INVESTMENT DECISION: CASE OF DIFFFERENT GENDER AND INDONESIA’S ETHNIC DIVERSITIES

• Main Author: Riko, Samuel
• Format: Final Project
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/72415
• Institution: Institut Teknologi Bandung

In the world of investment, there is a situation when people have the willingness to give away their profitable investment too soon and keeping their losing investment in a long time. That irrational behavior is named the disposition effect. One of the previous studies explained this behavior was conducted by Jaakko Aspara and Arvid O.I. Hoffmann (2015). They studied how shifting feelings of personal responsibility reverses the disposition effect. In their study, they include treatments to reverse disposition effect. This study will focus on one of the treatments which are to give understanding to people that their winning investment occurs due to external factor while their unprofitable investment occurs because of an internal factor. In this study, there will be separate calculation between gender and ethnic to meet this study’s objectives which are determining if there is gender effect on disposition effect. Moreover, this study was conducted to acknowledge what factor influence each gender in the financial decision making by each gender and, if there is a different tendency towards disposition effect by different ethnicity. This study calculates ethnic because this study was conducted in Indonesia which has many differences in the ethnic group which have their own culture. It might affect their perception towards disposition effect and the treatment. The result are Indonesian people don’t suffer disposition effect, the treatment itself makes them even more irrational. However, Javanese people suffer disposition effect and the treatment makes them rational compared to Chinese descent people who are actually rational, meaning that different culture could lead to different financial decision.