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The Formation of Rational and Irrational Behaviors in Risky Investment Decision Making: Laboratory Experiment of Coping Theory Implication in Investors’ Adaptation Model
Indonesian Capital Market Review
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| Title |
The Formation of Rational and Irrational Behaviors in Risky Investment Decision Making: Laboratory Experiment of Coping Theory Implication in Investors’ Adaptation Model
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| Creator |
Wendy Wendy; FE Univ. Tanjungpura, Pontianak
Marwan Asri; Faculty of Economics and Business, Universitas Gadjah Mada Jogiyanto Hartono; Faculty of Economics and Business, Universitas Gadjah Mada |
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| Subject |
Capital Market
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| Description |
This study analyzes the stock investor's rational and irrational behavior formation through Investor's Adaptation model. Hypotheses testings were conducted by manipulating four market conditions using between-subject experimental design. The results supported the hypotheses proposed in this study. When given treatment one (opportunity-high control), investors tended to adapt the profit maximizing strategy (rational). Meanwhile, when given treatment two (opportunity-low control), three (threat-high control) and four (threat-low control), they tended to adapt the profit satisfying strategy (rational-emotional), bad news handling strategy (emotional-rational), and self-preserving strategy (irrational) respectively. The application of rational strategies are intended to obtain personal benefits and profit, while adapting irrational strategy is intended to recover emotional stability and reduce some other tensions. Another finding showed that for the investors, the relatively irrational decision formation was "harder" than that of rational.
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| Publisher |
Management Research Center, Department of Management, Faculty of Economics and Business, U
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| Contributor |
—
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| Date |
2014-08-25
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| Type |
Peer-reviewed Article
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| Format |
application/mbox
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| Identifier |
http://journal.ui.ac.id/index.php/icmr/article/view/3615
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| Source |
Indonesian Capital Market Review; Vol 4, No 2 (2012): July 2012
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| Language |
en
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