Herding Behavior Triggers Investment Decisions for the New Investors in Indonesia: Overconfidence and Risk Tolerance as Mediating Variables

Syukri Lukman () and Syailendra Eka Saputra ()
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Syukri Lukman: Batam Institute of Technology, Department of Management and Marketing, School of Economics and Business
Syailendra Eka Saputra: PGRI University of West Sumatra, Faculty of Economic and Business

A chapter in Business and Sustainable Development in a Globalized and Digitalized Era, 2026, pp 403-425 from Springer

Abstract: Abstract This study aims to empirically prove the effect of herding on investment decisions of new investors on the Indonesia Stock Exchange through overconfidence and risk tolerance as mediating variables. The analysis used was quantitative, using path analysis. Our research sample consisted of 150 new investors on the IDX. Hypothesis verification was performed using a T-statistic. Imitative behavior and overconfidence in novice investors indicate an excessively high tolerance for risk, so that these conditions trigger their decisions to buy shares on the regular market in Indonesia. Investment decisions taken by novice investors in Indonesia are relatively formed due to herding behavior, this behavior also creates excessive self-confidence to gain profit in investing and shows a very high tolerance for risk. This tends to encourage many novice investors to experience losses in investing in stocks on the Indonesia Stock Exchange (IDX).

Keywords: Herding; Over Confident; Risk Tolerance & Investment Decision (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:spr:prbchp:978-3-032-29346-6_20

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DOI: 10.1007/978-3-032-29346-6_20

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