The Behavioural Theory Relevance of Mental Accounting for the Investment Decisions

Abstract

At first, investors in investing not only used estimates of investment instruments, but
psychological factors had also determined the investment. In fact, various parties state that the
psychological factor of this investor has the biggest role in investing. This study is an experiment
on financial option pricing. Arbitrage-free option pricing is tested against three hypotheses based
on mental accounting. The purpose of this study is to identify and confirm the theory of mental
accounting on informed decisions and investor considerations in investing in the capital market to
determine investment decision choices.. This research was conducted by using a questionnaire to
100 respondents of capital market participants with purposive sampling method. The method used
in this research is descriptive analysis. Based on the respondent's response data, it shows that the
respondents have divided the income they receive regularly every month, allocated to several
different accounts. Data analysis techniques used are descriptive statistics, t-test, and regression.
T-test and regression are results show The results of this study indicate that there are two
conclusions, namely the first research results show that investors are mentally accounting biased.
The second conclusion is that mental accounting affects investors' investment decisions in stocks