Claudia, Gita and Murniati, Monika Palupi (2018) SELF EFFICACY AS THE MODERATING VARIABLE IN FRAMING EFFECT ON INVESTMENT DECISION MAKING. South East Asia Journal of Contemporary Business, Economics and Law, 16 (1). pp. 22-27. ISSN 2289-1560

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Abstract

One of the responsibilities of company managers is to make decisions. Investment decision making is one example of what the managers need to consider. In addition, in making investment decisions, they need information. Submission of information can be framed into information that contains a positive (gain) or negative (lose) meaning. That framed information may affect investment decision making. Moreover, the managers’ personalities also play an important role in decision making. Later in this research, the personalities of the managers will be measured by self efficacy (individuals’ beliefs in their abilities). Self efficacy is related to the level of risk in decision making. Thus, this research aims to analyze the personalities of the managers as measured by self efficacy which can moderate the relationship between framing effect and investment decision making. Our experiment was conducted to 60 participants which were chosen randomly. A questionnaire was used to measure the level of their self efficacy and an assignment, in which the participants were to choose one of available options related to this research. The results of this research showed that individual’s personalities played an important role in making investment decisions. Individuals with high self efficacy tended to make risky decisions, because they were confident and believed in their capabilites. In contrast, individuals with low self efficacy were the ones who were less confident with their capabilities, so they tended to make safer decisions. This research is expected to be useful for all companies in order to provide a broader image related to the importance of the managers’ personalities in decision making.

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