Investment Decision-Making Behavior in the Era of Covid-19: An Analysis on the Basis of Mental Accounting, Loss Aversion Bias, and Risk Tolerance

Abstract

The era of Covid-19 is a condition that illustrates the uncertainty of national and world economic conditions, which encourages individuals to be able to manage their economy and finances. Therefore, this research aims to explain whether mental accounting, loss aversion bias, as well as risk tolerance can affect investment decision-making in the Covid-19 situation from the point of view of behavioral finance theory. The results of research using SEM PLS analysis show that Mental Accounting, Loss Aversion Bias, as well as Risk Tolerance, have an effect on investment decision-making. Based on behavioral finance theory, the results of the study illustrate that in the Covid 19 pandemic situation, individuals will generally respond to information received as a basis for making decisions by paying attention to the level of risk and optimizing the rate of return from the investment made.