Influence of Behavioral Biases on Investment Decisions: Moderating Role of Financial Literacy and Emotional Stability in The New Normal

The study explores how six different behavioral biases affect investing decisions. It carefully looks at how these biases affect investment decisions while taking financial literacy and emotional stability into account as a moderating factors. The primary focus of this study is a study of 384 individuals who are active stock exchange traders. Smart PLS 4 is one of the tools used in the data analysis phase to examine the collected data. Interestingly, the results highlight the construct validity of every item used, all of which show loading values that are greater than or equal to 0.60, indicating the measures' resilience. First, reflecting measurement models determine the integrity of the measurement model, and Partial Least Squares (PLS) provides the analytical framework. Structural equation modelling (SEM) then breaks down the complex correlations between variables. The results of these analyses indicate that the combined variables explain 37.53% of the total variation, indicating a noteworthy lack of substantial problems or differences in the standard methods used. Behavioral biases have a significant influence on investment decisions, which is a crucial finding of the study. It also emphasizes how important emotional stability is in this complex interaction as a moderating factor. This confirms the complex relationship between human biases and investing decision-making, highlighting the need of financial literacy and emotional stability in minimizing the impact of these biases.