JOURNAL OF THEORETICAL AND APPLIED MANAGEMENT Jurnal Manajemen Teori dan Terapan https://e-journal.unair.ac.id/jmtt p-ISSN: 1979-3650 e-ISSN: 2548-2149 Risk Tolerance: Heuristic Bias Towards Investment Decision Making *Wahyu Febri Ramadhan Sudirman 1 Mohd Winario 2 , Arif Mudi Priyatno 3 , Zubaidah Assyifa 2 1 Islamic Banking Program, Faculty of Islamic Studies, Universitas Pahlawan Tuanku Tambusai. Kampar, Indonesia 2 Islamic Economics Program, Faculty of Islamic Studies, Universitas Pahlawan Tuanku Tambusai. Kampar, Indonesia 3 Digital Business Program, Faculty of Islamic Studies, Universitas Pahlawan Tuanku Tambusai. Kampar, Indonesia Correspondence*: Address: Jl Tuanku Tambusai No 23 Bangkinang Kota, Kampar, Riau, Indonesia 28412 | e-mail: wahyu.febri.id@universitaspahlawan.ac.id Abstract Objective: This study aims to examine how risk tolerance influences the role of overconfidence bias and availability bias in investment decision-making. Because of the complexities of the investment decision-making process, this study attempts to investigate psychological variables in the investment decision-making process. Design/Methods/Approach: This study used the Structural Equation Modeling Partial Least Squares (SEM-PLS) analytic approach using the SmartPLS 3 program and survey data provided online to stock investors, with a total of 303 samples obtained. The study applied CMB preventive techniques to decrease common method bias (CMB). Findings: The results indicate a positive and significant mediating role of risk tolerance on the effect of overconfidence bias and availability bias toward investment decision-making. Originality/Value: This research seeks to explore the process of making investment decisions by taking into account the psychological aspects of investors by using a more comprehensive Bounded rationality theory point of view. This study tested the mediation mechanism of risk tolerance in bridging the influence of heuristic bias on investment decision- making, which has not been explored much by previous studies. Practical/Policy implication: The findings can guide investors to consider how they make biased investment decisions and help investment managers assess the appropriate level of investment risk. Keywords: Overconfidence bias, Availability bias, Risk tolerance, Investment decision, Bounded rationality JEL Classification: G400, G410, G110 DOI: https://doi.org/10.20473/jmtt.v16i2.47471 Submitted: July 11, 2023; Revised: August 7, 2023; Accepted: August 10, 2023; Published: August 21, 2023. Copyright © 2023, The Author(s) Published by Universitas Airlangga, Department of Management, Faculty of Economics and Business This article is published under the Creative Commons Attribution 4.0 (CC-BY) International License. The full terms of this license may be seen at: https://creativecommons.org/licenses/by/4.0/ Original Research Volume 16, No. 2, 2023