THE ROLE OF SUPERSTITION IN DECISION MAKING. Ratih Kurniasari 1 School Business and Management Institute Technology of Bandung Bandung, Indonesia

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1 THE ROLE OF SUPERSTITION IN DECISION MAKING Ratih Kurniasari 1 School Business and Management Institute Technology of Bandung Bandung, Indonesia Deddy P. Koesrindartoto 2 School Business and Management Institute Technology of Bandung Bandung, Indonesia Corresponding ratih.kurniasari@sbm-itb.ac.id ABSTRACT In Chinese belief, good luck and bad luck can be predicted by feng shui. For having some good luck people do irrational thing such as by seeing the fortune number in China numerologist, color and logo shape, the lucky element at certain Chinese year, and many more. In this research I want to investigate the whether the lucky firm based on superstition of luck related with firm s logo including number, logo s color and shape have better firm s performance rather than unlucky firm in Indonesia. The data used were obtained from IDX statistic for 87 firms. I employ logistic regression to divide the lucky and unlucky firm, and t-test for testing the significant difference between lucky firm and unlucky firm. Keywords:Fengshui, Lucky firm, Unlucky firm, IDX statistic 1. INTRODUCTION Superstition belief can be applied and practice surrounding luck, prophecy and spiritual being, particularly the belief that future event can be foretold by specific unrelated prior events (Vyse, 2000). Throughout history, the ancestors were believed in some rituals, objects, or symbols which influence their luck, and it still happen until this modern era. Example the personal athletes and stock traders often wear lucky articles of clothing, keep lucky charm, or follow the luck-inducing rituals (Burger and Lynn, 2005), (Collin, 2003), ( Melamed and Tamarkin, 1996). In psychological studies, the magical thinking about the everyday matter in the laboratory is easy to stimulate (Pronin et al, 2006). The superstitious belief limited to scientific illiterate, indeed, there is no clear relation between education level and paranormal thinking (De Roberties and Delaney, 1993), (Farha and Steward, 2006), (Goode, 2002), (Mowen and Carlson, 2003). Traditionally in Chinese belief, welfare can be governed by luck, and there were three types of luck like heaven luck, earth luck and human luck. Heaven luck referred into destiny which difficult to change and beyond humans control, whereas earth luck and human luck can be manipulated by human control and it can be altered by follow the feng shui wisdom. Feng shui is the superstitious science based on the sensible notion for living with rather than against nature benefits both humans and environment (Coleman, 2004).

2 Prosperity or luck can be determined by feng shui, for example to decide the lucky firm it can be acquired based on the firm s logo. Logo is communicative way to describe the purpose and mission of the product or goods in positive way, and also reflection of the firm. Good logo can represent the guarantee of quality and image of the product and good. In feng shui approach, to conduct the good logo we should consider not only on the art perspective but also in composition harmony related with logo s shape and five elements or Wu Xing concept (Dian, 2010). In Wu Xing concept Chi energy manifests in to five elements such as fire, water, earth, wood, and metal. The relations between each element can be benefit relation (positive) or destructive relation (negative). Fire-earth-metal-water-wood-fire is a cyclic of benefit relation, because each element get the advantage for that relationship, for example fire produce the dust/earth so that earth created by fire. The destructive relation is wood-earth-water-fire-metal-wood because the relation caused the damage. To identify the firm s types based on element approach, I quote from the expert as shown on the table below. The harmony between elements and business sector can impact the firm s existence, whether it could be good firm or the opposite. Table 1: Firm s sector based on element approach (Dian, 2010) Element Fire Water Wood Metal Earth Job type Mining, restaurant, lawyer, drug store, marketing Tourism, travel, hotel, transportation Agribusiness, architect, accountant Finance, insurance, stock, machining Property, developer, contractor Moreover, the prediction of lucky firm or unlucky firm can be obtained by calculate the number from product brand or firm s name (Dian, 2012). With table of calculation as shown below, the conversion from alphabet into number can be done. After that by sum all the number then we gets some number which represent the name of firm or brand. Table 2: Conversion from alphabet into number A B C D E F G H I J K L M N O P Q R S T U V W X Y Z In this paper, I want to test whether the information of lucky firm based on that superstitious can deliver good performance rather than the unlucky firm in Indonesia. The zero hypotheses to be tested in to be tested in this study is performance of lucky firm is less than unlucky firm. The remainder of this paper is as

3 follows: section 2, we provide the data and methodology. In section 3, we present the empirical analysis. Finally in section 4, we offer the conclusion of the main results. 3. DATA AND METHODOLOGY The data used were obtained from IDX statistic for 87 firms which established from 1989 until Then I listed the sector type of firms, consist with financing sectors, agribusiness sectors, mining sectors, property sectors, and tourism sectors. I analyze the sample of data based on logo shape, color and also number. With running the logistic regression, include the sample both firms with lucky and unlucky firm on the sample. The dependent variable, Lucky, is a dummy variable which equals 1 if all lucky components were positive. The independent variables include the logo s number and color, also expert suggestion. After set the listing of lucky firm then using the t-test to investigate whether the lucky firms have good performance rather than unlucky firms, the performance of firm data acquired from the expected return: the stock return minus market return. 3.1 SET LUCKY FIRM In Feng shui Chi energy manifests in five form the five element of fire, earth, wood, water, or metal. These elements will interact with each other in the cycles and it will affect the luck if the negative correlation occurs. The firm s sector also divides into the five elements as shown in the table below. Table 3: The sector s element Element Metal Water Wood Fire Earth Firm s Sector Finance Tourism Agribusiness Mining Property After divide the firm into element type, then observe the relation between elements, logo s shape and logo s color as shown in table 4 below. Table 4: The logo s number-color for each element Logo Firm s element Color Shape Metal White Circle Water Black Random shape Wood Green Rectangle Fire Red Triangle Earth Yellow Square

4 Next, by using the conversion at table 2, firm s name calculate then interpret the result and divide that into two term condition: good condition (lucky) or bad condition (unlucky). 4. EMPIRICAL ANALYSIS 4.1 LOGISTIC REGRESSION Table 5 provides results of logistic regression for lucky firm prediction. The dependent variable Lucky is a dummy variable which equal 1 if the lucky variable (logo s number, logo s color and logo s shape) is positive and for unlucky it s equal to 0 when variables is negative. Table 5: Logistic Regression Result for unlucky firm Variables in the Equation B S.E. Wald df Sig. Exp(B) Step 0 Constant Variables not in the Equation Score df Sig. Step 0 Variables number color shape Overall Statistics Table 6: Logistic regression result for lucky firm Variables in the Equation S.E. Wald df Sig. Exp(B) Variables in the Equation S.E. Wald df Sig a. Variable(s) entered on step 1: number, color, shape.

5 4.2 T-TEST By using the t-test I want to observe the significant difference between lucky and unlucky firm, which the hypothesis as shown below. Which is the expected return for lucky firm, and is the expected return for unlucky firm. Table 6: T-test Result Paired Samples Test Paired Differences 95% Confidence Interval of the Std. Std. Error Difference Sig. (2- Mean Deviation Mean Lower Upper t df tailed) Pair 1 lucky firm lucky 19 3 firm From t-test founded that no significant difference between performance of lucky firm and unlucky firm because the significant level is more than CONCLUSION This paper examine whether the lucky firm based on superstition of luck related with firm s logo including number, color s logo and also logo s shape have better firm s performance rather than unlucky firm in Indonesia using logistic regression and t-test. From this study founded that no significant difference between performance of lucky firm and unlucky firm. Further Research we suggest comparing the lucky firm based on feng shui in Indonesia with another country and also observed the lucky firm based on the element relationship. REFFERENCE Bourassa, S., and D. Peng., V Hedonic Price and House Numbers: The influence of Fengshui.

6 Burger, Jerry M., and Amy L. Lynn, 2005, Superstitious behavior among American and Japanese professional baseball players, Basic and Applied Social Psychology 27, Collin, Meghan, 2003, Traders ward off evil spirits: Halloween is just one more day in Wall Street's endless effort not to tempt fate, CNN/Money, Oct 31. Coleman, Melisa, 2004, Feng shui Secrets Revealed Dian, Mas., Kartika J, (2010). Feng shui untuk Logo: Panduan Praktis Merancang Logo untuk Menghasilkan Kualitas yang Menguntungkan. Elex Media Computindo. De Robertis, M. M., and P.A. Delaney, 1993, A survey of the attitudes of university students to astrology and astronomy, Journal of the Royal Astronomical Society of Canada 87, Farha, Bryan, and Gary Steward, 2006, Paranormal beliefs: An analysis of college students, Skeptical Inquirer 30, Hirshleifer, David., Jian, Ming., and Zhan., Huai, 2012, Superstition and Financial Decision Making. Lim, Suhana, 2013, Hidup Lebih Sehat, Senang, dan Sejahtera dengan Fengshui, Gramedia Pustaka. Melamed, Leo, and Bob Tamarkin, Leo Melamed: Escape to the futures (John Wiley & Sons Inc). Mowen, John C., and Brad Carlson, 2003, Exploring the antecedents and consumer behavior consequences of the trait of superstition, Psychology and Marketing 20, Pronin, Emily, Daniel M. Wegner, Kimberly McCarthy, and Sylvia Rodriguez, 2006, Everyday magical powers: The role of apparent mental causation in the overestimation of personal influence, Journal of Personality and Social Psychology 91, Vyse, Stuart., Believing in Magic The Psychology of Superstition. Oxford University Press.

INTRODUCTION. be, yet people still believe and consider it in each of their action.

INTRODUCTION. be, yet people still believe and consider it in each of their action. CHAPTER Ⅰ INTRODUCTION 1.1 Background There is a lot of superstitious belief phenomena occurred nowadays in Indonesia. Superstitious belief is something that traditionally owned by people who believe in