The Influence of Overconfidence, Herding Behavior, and Self-Control on Investment Decisions: Moderation of Financial Literacy among Stock Investors in Pontianak City

Abstract

Sound investment decisions are essential for achieving long-term financial goals, yet many investors are influenced by behavioral biases rather than rational analysis, particularly in regions with rapid investor growth and limited financial literacy. This study examines the effects of overconfidence, herding behavior, and self-control on stock investment decisions, with financial literacy as a moderating variable, among stock investors in Pontianak City. This research employed an associative quantitative approach using primary data collected through questionnaires from 150 stock investors. The variables analyzed included overconfidence, herding behavior, self-control, investment decisions, and financial literacy. Data were analyzed using instrument tests, classical assumption tests, and Moderated Regression Analysis (MRA), supported by correlation, determination, F-test, and t-test analyses with SPSS. The results indicate that overconfidence, herding behavior, and self-control simultaneously have a significant effect on investment decisions. Partially, overconfidence and self-control significantly influence investment decisions, while herding behavior does not. Financial literacy significantly strengthens the relationship between overconfidence and investment decisions but does not moderate the effects of herding behavior and self-control. The inclusion of financial literacy increased the model’s explanatory power from 28.4% to 38.4%. The study concludes that behavioral biases, particularly overconfidence, play a crucial role in investment decisions, and financial literacy serves as an important moderating factor in reducing irrational decision-making among investors.