Beyond Rationality: The Influence of Fear of Missing Out and Behavioral Biases on Investment Decision-Making

Abstract

This study aims to examine the influence of Fear of Missing Out (FoMO), anchoring bias, herding bias, and overconfidence bias on investor behavior in investment decision-making in the Indonesia Stock Exchange. This study employs a quantitative research approach using primary data collected through questionnaires distributed via Google Forms. The sample consists of 112 investors selected using simple random sampling. Data analysis is conducted using Partial Least Squares Structural Equation Modeling (PLS-SEM) with SmartPLS. The results indicate that anchoring bias and overconfidence bias have a positive and significant effect on investment decision-making. In contrast, Fear of Missing Out (FoMO) and herding bias do not have a significant effect. This study contributes to the behavioral finance literature by providing empirical evidence on the differing roles of psychological biases in investment decisions within the Indonesian context. It highlights that not all behavioral biases significantly influence decision-making, particularly among investors with higher financial knowledge and emotional stability. The findings suggest that investors should be aware of cognitive biases, particularly anchoring and overconfidence, which may lead to suboptimal decisions. Financial educators and regulators (e.g., OJK and IDX) are encouraged to enhance investor education programs to improve rational decision-making and reduce bias-driven behavior. This study is limited by its sample size and focus on individual investors, which may not fully represent the broader investor population. Future research is recommended to include larger samples, additional variables, and comparative analysis across different investor segments.