Investor experience and expectation towards decision-making process

Chou et al. (2010) examined the relationship between investment experience and risk propensity, risk propensity to risk perception. This study developed Chou et al. (2010) by adding testing on risk perception to return expectation and investment experience on return expectation. This research will test the effect of investment experience on risk propensity, risk propensity on risk perception, and investment experience on return expectation. This research contributes to the issues of investors' decision-making toward several factors such as risk propensity, risk perception, investor experience, and return expectation. The results showed that investment experience positively affects risk propensity, risk propensity negatively affects risk perception, and risk perception positively affects return expectation. The research found an indirect effect of risk perception to return expectation. This result is likely because individual investors trade more in the short-run than in the long-run. This trend strengthen because more individual investors prefer technical rather than fundamental analysis.