Financial Literacy and Overconfidence Impact on Investment Decisions in Ponzi Scheme Investments

The increasing accessibility of digital financial services has expanded investment opportunities while simultaneously increasing public exposure to fraudulent investment schemes such as Ponzi schemes. Despite various financial education initiatives, many individuals remain vulnerable to deceptive investment offers. This study investigates the influence of financial literacy and overconfidence on investment decision-making in the context of Ponzi schemes. Drawing upon behavioral finance and prospect theory, the study examines how cognitive and psychological factors shape investor behavior when confronted with misleading investment information. This research employs a quantitative explanatory approach, using primary data collected through a survey of 200 respondents with investment experience. Data were analyzed using multiple linear regression and moderated regression to assess the relationships among financial literacy, overconfidence, and investment decisions. The findings indicate that financial literacy has a significant positive effect on investment decision-making, suggesting that individuals with greater financial knowledge are more cautious and rational in evaluating suspicious investment opportunities. Conversely, overconfidence does not show a significant direct effect on Ponzi scheme investment decisions. This finding suggests that excessive self-confidence alone is insufficient to drive irrational investment behavior unless accompanied by external stimuli such as persuasive or manipulative information framing. The study contributes to the behavioral finance literature by highlighting the protective role of financial literacy against fraudulent investments and by demonstrating that cognitive biases, such as overconfidence, operate contextually within specific informational environments. Practically, the results emphasize the importance of strengthening financial education and investor awareness to reduce susceptibility to fraudulent investment schemes.