The Effect of Heuristic Bias and Herding Bias on Investment Decisions with Financial Literacy as a Moderating Variable in Gen Z

Abstract

This study aims to examine the influence of heuristic bias and herding bias on investment decisions, and evaluate the role of financial literacy as a moderating variable on Gen Z investors in Indonesia. Data was collected from 170 respondents with at least three years of investment experience, analyzed using SEM-PLS. The results show that heuristic bias and herding bias have a significant positive effect on investment decisions. Financial literacy also has a positive effect, but only moderates (weakens) the relationship between heuristic bias and investment decisions. There is no moderation on herding bias. These findings emphasize the importance of financial literacy in mitigating the effects of behavioral biases, although social influences remain strong in Gen Z's decision-making.