Heuristic Behavior as Mediating Effect of Neurofinance and Entrepreneur's Financial Decision-Making: Evidence of Pretest-Posttest Experiment

The contributing factors of failure in financial decision-making are psychology and behavior. Thus, this research aims to examine the mediating effect of heuristic behavior on emotions (neuro function) and financial decision-making. Emotion and financial decision-making of entrepreneurs were identified from the pretest-posttest in experimental analysis. The subjects answered the questionnaire for emotion and financial decision-making in pre-testing experiment. Next, the manipulation of emotions used 12 to 16 minutes of video clips to identify the positive emotion and negative emotion of the subjects. Lastly, in post-testing, the subjects repeatedly answered the emotion and financial decision-making questionnaire followed by a heuristic behavior questionnaire. The data were gathered and analyzed using mediation analysis. The findings showed that heuristic behavior was partially mediated by emotions and financial decision-making. Negative emotion was significantly affected by financial decision-making through heuristic behavior. The neurobehavioral of financial decision-making models were incorporated into the brain components and working memory. Findings from this research would assist the entrepreneurs to make effective and efficient financial decisions if they ignore their emotions. This research suggests using other techniques of Structural Equation Model for further analysis, applying laboratory experiment to improve the results, and testing heuristic as moderator.