Understanding generational differences in herding behavior is crucial for policymakers, financial educators, and market regulators, particularly in emerging markets where retail investor participation is rapidly growing. This study investigates the influence of herding behavior on investment decision-making among Generations X, Y, and Z in Indonesia, as well as the moderating role of investment experience. Using a multi-group structural equation modeling (SEM) approach with data from 1293 retail investors, the research compares behavioral tendencies across cohorts. Results reveal that herding behavior has a positive and significant impact on investment decision-making in all generations, with the strongest effect observed in Generation X, followed by Generation Z and Generation Y. Investment experience significantly weakens herding behavior’s influence for Generation X but shows no significant moderating effect for Generations Y and Z, suggesting that psychological and social influences, particularly from digital platforms, may outweigh experiential learning in younger cohorts. These findings align with behavioral finance theory, which explains herding as a cognitive and emotional bias heightened by market uncertainty. The results provide practical implications for designing targeted financial education programs and regulatory measures to promote independent decision-making and reduce susceptibility to biased market information, especially among younger generations in digitally driven investment environments.
Syukur et al. (2025) studied this question.