Mediating Role of Optimism Bias and Risk Perception Between Emotional Intelligence and Decision-Making: A Serial Mediation Model

Abstract

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The commodity market plays a vital role in boosting the economy. Investors make decisions based on market knowledge and ignore cognitive biases. These cognitive biases or judgment errors have a significant effect on investment decisions. Therefore, this study aimed to investigate the effect of emotional intelligence on decision-making. In addition, optimism bias and risk perception are the intervening variables between emotional intelligence and decision-making. So, this study contributes to the body of knowledge by examining the mediating role of optimism bias and risk perception. The data were collected from the respondents of the commodity market and the 370 questionnaires were distributed among the investors, of which 337 respondents gave their feedback. The convenience base sampling technique is used due to the easy access of respondents, time factor, and cost factor. Data entered into the SPSS Statistics Version 26 and PROCESS macro model 6 were used for serial mediation. AMOS was used for the validity and model-fit analysis. The results of this study aligned with the literature that there is a significant effect of emotional intelligence on decision-making. It also observed that optimism bias has a positive effect on decision-making. The finding of this study will be helpful for the brokers, the government, and especially the investors. This study also proposed that future studies on the stock exchange and real estate market comparative analysis can be conducted.

Keywords

• emotional intelligence
• optimism bias
• risk perception
• investment decisions
• commodity market