Investment Decisions in Retirement Planning for Lecturers in Indonesia: Overconfidence and Representativeness Bias

Abstract

Main Purpose - This study aims to examine the influence of overconfidence bias and representativeness bias on decision-making in retirement planning. Method - This study is a cross-sectional study using an explanatory method. Main Findings – The findings of this study showed that investment decision in retirement planning for lectures was influenced by overconfidence bias and representativeness bias. Based on the significance test results, the influence had a negative direction, meaning that the lower the overconfidence bias and representativeness bias, the better the retirement planning with investment decisions. This shows that in making investment decisions for retirement planning, individuals will be more careful and will avoid mistakes to do better retirement planning. Theory and Practical Implications - The financial behavior theory explains that cognitive biases, like overconfidence and representativeness bias, can lead to irrational investment decisions. Biased investors often overestimate their abilities and overlook accurate statistical data. Practically, this means individuals should carefully seek reliable information and avoid judgment errors when planning for retirement to make better investment decisions. Novelty - This study put investment decisions in the context of Indonesian lecturers' plans for retirement.