Behavioral Biases and Government Bonds Investment Decisions Across Generations: The Mediating Role of Risk Perception
Article Sidebar
Main Article Content
Abstract
Investor behavior in making investment decisions is not always rational because it is affected by multiple behavioral biases. The influence of these biases can vary across generations as a result of differing characteristics, investment preferences, and risk perceptions. This study investigates the impact of behavioral biases on investment decisions in government bonds, with risk perception as a mediating variable, and to compare this relationship between Generation X and Generation Y (Millennials). This study utilized a quantitative approach, with a sample of 444 individual investors who are customers of large capitalization banks with high levels of government bond absorption in Indonesia selected using purposive sampling techniques. Data were collected through questionnaires that met validity and reliability tests. The analysis was conducted using Multi Group Mediation Analysis (Sub Sample Analysis) through Baron and Kenny's Path Analysis approach to examine direct and indirect relationships across the entire sample and each generational group. The empirical findings suggest that behavioral bias plays a significant role in shaping government bond investment decisions. Furthermore, risk perception is proven to partially mediate the relationship between behavioral bias and investment decisions, both in the overall sample and in the subsamples of Generation X and Generation Y. The findings from the multigroup analysis indicate that the relationships between the variables vary in magnitude across Generation X and Generation Y. This study underscores the importance of considering both behavioral factors and generational characteristics in the development of marketing strategies, education, and developing government bond investment products.
Article Details
This work is licensed under a Creative Commons Attribution 4.0 International License.
This work is licensed under a Creative Commons Attribution 4.0 International License.
References
Adekoya, O. B. (2020). Portfolio Balance Approach to Asymmetries, Structural Breaks and Financial Crisis: Testing a Model for Nigeria. Central Bank of Nigeria Journal of Applied Statistics, 11(1), 87-110. https://doi.org/10.33429/cjas.11120.4/5
Adil, M., Singh, Y., & Ansari, M. S. (2022). How Financial Literacy Moderate the Association between Behaviour Biases and Investment Decision? Asian Journal of Accounting Research, 7(1), 17-30. https://doi.org/10.1108/AJAR-09-2020-0086
Ahmad, M. (2024). The Role of Cognitive Heuristic-Driven Biases in Investment Management Activities and Market Efficiency: A Research Synthesis. International Journal of Emerging Markets, 19(2), 273-321. https://doi.org/10.1108/IJOEM-07-2020-0749
Ahmad, M., & Shah, S. Z. A. (2022). Overconfidence Heuristic-Driven Bias in Investment Decision-Making and Performance: Mediating Effects of Risk Perception and Moderating Effects of Financial Literacy. Journal of Economic and Administrative Sciences, 38(1), 60-90. https://doi.org/10.1108/JEAS-07-2020-0116
Ahmad, M., & Wilkins, S. (2025). Purposive Sampling in Qualitative Research: A Framework for the Entire Journey. Quality & Quantity, 59(2), 1461-1479. https://doi.org/10.1007/s11135-024-02022-5
Ahmad, M., & Wu, Q. (2024). Heuristic-Driven Biases as Mental Shortcuts in Investment Management Activities: A Qualitative Study. Qualitative Research in Financial Markets, 16(2), 291-309. https://doi.org/10.1108/QRFM-10-2022-0167
Ahmed, Z., Rasool, S., Saleem, Q., Khan, M. A., & Kanwal, S. (2022). Mediating Role of Risk Perception between Behavioral Biases and Investor’s Investment Decisions. Sage Open, 12(2), 1-18. https://doi.org/10.1177/21582440221097394
Ahmed, S. U., Ahmed, S. P., Abdullah, M., & Karmaker, U. (2022). Do Socio-Political Factors Affect Investment Performance? Cogent Economics & Finance, 10(1), 2113496. https://doi.org/10.1080/23322039.2022.2113496
Almansour, B. Y., Elkrghli, S., & Almansour, A. Y. (2023). Behavioral Finance Factors and Investment Decisions: A Mediating Role of Risk Perception. Cogent Economics and Finance, 11(2), 1-20. https://doi.org/10.1080/23322039.2023.2239032
Baron, R. M., & Kenny, D. A. (1986). The Moderator - Mediator Variable Distinction in Social Psychological Research: Conceptual, Strategic, and Statistical Considerations. Journal of Personality and Social Psychology, 51(6), 1173-1182. https://doi.org/10.1037//0022-3514.51.6.1173
Botzen, W. J. W., Duijndam, S. J., Robinson, P. J., & van Beukering, P. (2022). Behavioral Biases and Heuristics in Perceptions of COVID‐19 Risks and Prevention Decisions. Risk Analysis, 42(12), 2671-2690. https://doi.org/10.1111/risa.13882
Caravello, T., Martinez-Bruera, P., & Carrasco, A. (2025). Reassessing Central Bank Reputation: Beyond Long-Run Expectations. Optimal Monetary Policy with Reputational Concerns, 1-101.
Dierks, L. H., & Tiggelbeck, S. (2021). Emotional Finance: The Impact of Emotions on Investment Decisions. Journal of New Finance, 2(2), 1-19.
Dinarjito, A. (2023). The Influence of Financial Behavior on Investment Decisions with Financial Literacy as a Mediation Variable. Jurnal Pajak Dan Keuangan Negara, 5(1), 128-143. https://doi.org/10.31092/jpkn.v5i1.2281
DJPPR. (2023). Surat Berharga Negara: Jadwal Lelang, Perizinan dan Data Historis SBN - Ringkasan Hasil Penerbitan Tahun 2023. Kementerian Keuangan Republik Indonesia. Retrieved 7 June, 2026, from: https://djppr.kemenkeu.go.id/ringkasanhasilpenerbitan
George, D., & Mallery, P. (2019). IBM SPSS Statistics 26 Step by Step (16th ed.). New York: Routledge.
Goldring, D., & Azab, C. (2021). New Rules of Social Media Shopping: Personality Differences of U.S. Gen Z Versus Gen X Market Mavens. Journal of Consumer Behaviour, 20(4), 884-897. https://doi.org/10.1002/cb.1893
Hair, J. F., Black, W. C., Babin, B. J., & Anderson, R. E. (2019). Multivariate Data Analysis Eighth Edition (8th ed.). Cengage.
Hampson, D. P., Gong, S., & Xie, Y. (2021). How Consumer Confidence Affects Price Conscious Behavior: The Roles of Financial Vulnerability and Locus of Control. Journal of Business Research, 132, 693-704. https://doi.org/10.1016/j.jbusres.2020.10.032
Jain, J., Walia, N., Singla, H., Singh, S., Sood, K., & Grima, S. (2023). Heuristic Biases as Mental Shortcuts to Investment Decision-Making: A Mediation Analysis of Risk Perception. Risks, 11(4), 1-22. https://doi.org/10.3390/risks11040072
Jopling, M. (2019). Using Quantitative Data. Practical Research Methods in Education (1st ed.). Routledge.
Karki, D., Dahal, R. K., & Bhattarai, G. (2024). Rational and Irrational Influences on Investing Decisions. Corporate & Business Strategy Review, 5(2), 92-101. https://doi.org/10.22495/cbsrv5i2art8
Kartini, K., & Nahda, K. (2021). Behavioral Biases on Investment Decision: A Case Study in Indonesia. The Journal of Asian Finance, Economics and Business (JAFEB), 8(3), 1231-1240. https://doi.org/10.13106/jafeb.2021.vol8.no3.1231
Kasoga, P. S. (2021). Heuristic Biases and Investment Decisions: Multiple Mediation Mechanisms of Risk Tolerance and Financial Literacy - A Survey at the Tanzania Stock Market. Journal of Money and Business, 1(2), 102-116. https://doi.org/10.1108/JMB-10-2021-0037
Kaufman, A. R., Persoskie, A., Twesten, J., & Bromberg, J. (2020). A Review of Risk Perception Measurement in Tobacco Control Research. BMJ Publishing Group, 29(1), 50-58. https://doi.org/10.1136/tobaccocontrol-2017-054005
Kim, E. E. K., Seo, K., & Choi, Y. (2022). Compensatory Travel Post COVID-19: Cognitive and Emotional Effects of Risk Perception. Journal of Travel Research, 61(8), 1895-1909. https://doi.org/10.1177/00472875211048930
Kim, J., Kumar, A., Mallick, S., & Park, D. (2024). Financial Uncertainty and Interest Rate Movements: Is Asian Bond Market Volatility Different? Annals of Operations Research, 334(1-3), 731-759. https://doi.org/10.1007/s10479-021-04314-7
Kühnen, M., Silva, S., & Hahn, R. (2022). From Negative to Positive Sustainability Performance Measurement and Assessment? A Qualitative Inquiry Drawing on Framing Effects Theory. Business Strategy and the Environment, 31(5), 1985-2001. https://doi.org/10.1002/bse.2994
Lathief, J. T. A., Kumaravel, S. C., Velnadar, R., Vijayan, R. V., & Parayitam, S. (2024). Quantifying Risk in Investment Decision-Making. Journal of Risk and Financial Management, 17(2), 1-21. https://doi.org/10.3390/jrfm17020082
Lieanto, C. T., & Kohardinata, C. (2025). Influence of Socio-Economic, Financial Literacy, and Digital Financial Literacy on Gen Z’s Investment Behavior. Journal of Accounting, Entrepreneurship and Financial Technology (JAEF), 6(2), 155-174. https://doi.org/10.37715/jaef.v6i2.5614
Manrai, R., Yadav, P. D., & Goel, U. (2024). Factors Affecting Adoption of Digital Payments by Urban Women: Understanding the Moderating Role of Perceived Financial Risk. Technology Analysis & Strategic Management, 36(10), 2385-2397. https://doi.org/10.1080/09537325.2022.2139237
Maříková, M., Řehoř, P., Vrchota, J., & Klarner, L. (2025). Factors of Work Motivation in Production Engineering for Baby Boomers, Generations X, Y and Z. Management Systems in Production Engineering, 33(3), 321-331. https://doi.org/10.2478/mspe-2025-0031
Monteiro, B. A., & Bressan, A. A. (2021). Framing Effects of Information on Investment Risk Perception. Revista Contabilidade & Finanças, 32(86), 285-300. https://doi.org/10.1590/1808-057x202111290
Nadhila, A., Sembel, R., & Malau, M. (2024). The Influence of Overconfidence and Risk Perception on Investment Decisions: The Moderating Effect of Financial Literacy on Individual Millennial Generation Investors. Journal of Universal Studies, 4(6), 5280-5299. https://doi.org/10.59188/eduvest.v4i6.1219
Nie, J., Wu, Z., Wang, S., & Chen, Y. (2021). Duration Strategy for Bond Investment Based on an Empirical Study. Proceedings of the 2021 3rd International Conference on Economic Management and Cultural Industry (ICEMCI 2021), 203, 1726-1730.
OJK. (2023). Laporan Statistik 2023. Direktorat Analisis Informasi Pasar Modal. Retrieved 7 June, 2026, from: https://www.ojk.go.id/id/kanal/pasar-modal/data-dan-statistik/statistik-pasar-modal/
Omodero, C. O., & Alege, P. O. (2021). The Innovation of Government Bonds in the Growth of an Emergent Capital Market. Journal of Open Innovation: Technology, Market, and Complexity, 7(1), 1-10. https://doi.org/10.3390/joitmc7010103
Petlele, O., & Buthelezi, E. M. (2025). Shocks of Government Bonds and Yield Impact Economic Growth in South Africa. Cogent Economics and Finance, 13(1), 1-24. https://doi.org/10.1080/23322039.2024.2448219
Pranajaya, E., Alexandri, M. B., Chan, A., & Hermanto, B. (2024). Examining the Influence of Financial Inclusion on Investment Decision: A Bibliometric Review. Heliyon, 10(3), 1-25. https://doi.org/10.1016/j.heliyon.2024.e25779
Risman, A. (2024). The Behavioral Finance of MSME: Digital Finance, Managerial Biases, Financial Literacy. Dinasti International Journal of Economics, Finance & Accounting (DIJEFA), 5(2), 641-649. https://doi.org/10.38035/dijefa.v5i2.2660
Sachdeva, M., & Lehal, R. (2024). Contextual Factors Influencing Investment Decision Making: A Multi Group Analysis. PSU Research Review: An International Journal, 8(3), 592-608. https://doi.org/10.1108/PRR-08-2022-0125
Saivasan, R., & Lokhande, M. (2022). Influence of Risk Propensity, Behavioural Biases and Demographic Factors on Equity Investors’ Risk Perception. Asian Journal of Economics and Banking, 6(3), 373-403. https://doi.org/10.1108/AJEB-06-2021-0074
Saunders, M. N. K., Lewis, P., & Thornhill, A. (2019). Research Methods for Business Students (8th ed.). Pearson.
Sebastião, H., Silva, N., Torres, P., & Godinho, P. (2024). Financial Literacy Bias: A Comparison between Students and Nonstudents. Review of Behavioral Finance, 16(4), 620-642. https://doi.org/10.1108/RBF-01-2023-0023
Suresh, G. (2024). Impact of Financial Literacy and Behavioural Biases on Investment Decision-making. FIIB Business Review, 13(1), 72-86. https://doi.org/10.1177/23197145211035481
Syukur, A., Amron, A., Riyanto, F., Putra, F. I. F. S., & Pangemanan, R. R. (2025). Generational Insights into Herding Behavior: The Moderating Role of Investment Experience in Shaping Decisions among Generations X, Y, and Z. International Journal of Financial Studies, 13(3), 1-27. https://doi.org/10.3390/ijfs13030176
Trading Economics. (2026). Indonesia Interest Rate. Trading Economics. Retrieved 7 June, 2026, from: https://tradingeconomics.com/indonesia/interest-rate
Van Binsbergen, J. H., Nozawa, Y., & Schwert, M. (2025). Duration-Based Valuation of Corporate Bonds. The Review of Financial Studies, 38(1), 158-191. https://doi.org/10.1093/rfs/hhae054
Vasileiou, E. (2022). Behavioral Finance and Market Efficiency in the Time of the COVID-19 Pandemic: Does Fear Drive the Market? The Political Economy of Covid-19. Routledge.
Vayanos, D., & Vila, J.-L. (2021). A Preferred‐Habitat Model of the Term Structure of Interest Rates. Econometrica, 89(1), 77-112. https://doi.org/10.3982/ecta17440
Walliman, N. (2021). Research Methods: The Basics (3rd ed.). London: Routledge.
Wang, Y., Jiang, A., Zhang, S., & Chen, W. (2024). Traditional Finance, Digital Finance, and Financial Efficiency: An Empirical Analysis Based on 19 Urban Agglomerations in China. International Review of Financial Analysis, 96, 1-11 https://doi.org/10.1016/j.irfa.2024.103603
Wangzhou, K., Khan, M., Hussain, S., Ishfaq, M., & Farooqi, R. (2021). Effect of Regret Aversion and Information Cascade on Investment Decisions in the Real Estate Sector: The Mediating Role of Risk Perception and the Moderating Effect of Financial Literacy. Frontiers in Psychology, 12, 1-15. https://doi.org/10.3389/fpsyg.2021.736753
Wattanasan, P., Bhupesh, L., & Pallela, S. (2020). An Explorational Study on Influencing Factors in Financial Investment Decisions in Thailand Securities Market. International Journal of Advanced Science and Technology, 29(3), 8237-8243.