Investor Happiness

Merkle, Christoph; Egan, Daniel; Davies, Greg B.

doi:10.2139/ssrn.2326374

Cited by 7 publications

(10 citation statements)

References 27 publications

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“…numerical estimates (like best-high-low estimates, with a given confidence interval) of future returns on their investments for the next months, which allows to calculate numerical return expectations as well as implicit expected volatility (e.g., Weber et al (2013), Merkle and Weber (2014), Merkle (2017), Merkle (2020)). In some cases, qualitative estimates are requested and investors have to rate the returns they expect from their own portfolios over the next months on a seven-point Likert scale aiming at capturing individual perceptions or optimism (e.g., Hoffmann et al (2013), Weber et al (2013), Merkle and Weber (2014), Hoffmann et al (2015), Merkle et al (2015), Hoffmann and Post (2017), Merkle (2020)). 10 In this paper, both the piece of information collected and the context differ.…”

Section: Introductionmentioning

confidence: 99%

Do retail investors bite off more than they can chew? A close look at their return objectives

D’Hondt¹,

Winne²,

Merli

2021

Journal of Economic Behavior & Organization

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Using information self-reported by retail investors in a risk-return profiling survey, we investigate the determinants of individual return objectives as well as the capacity of investors to reach them. Controlling for a large set of covariates, we provide empirical evidence that return objectives are related to subjective individual characteristics (such as financial literacy and risk tolerance), some sociodemographics (age, education), as well as recent past trading intensity. Retail investors with higher return objectives perform better, compared to their counterparts who want to avoid any risk of capital loss. The capacity to reach the return objective however decreases as the level of return objectives increases.

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Section: Introductionmentioning

confidence: 99%

Do retail investors bite off more than they can chew? A close look at their return objectives

D’Hondt¹,

Winne²,

Merli

2021

Journal of Economic Behavior & Organization

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“…Recently, finance literature has started to pay more attention to investor satisfaction. For example, using an investor sample of a UK bank, Merkle et al (2015) find relative performance, i.e. comparisons to a benchmark, to be an important driver for investor satisfaction.…”

Section: Introductionmentioning

confidence: 99%

All’s well that ends well? On the importance of how returns are achieved

Grosshans

Zeisberger

2018

Journal of Banking & Finance

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We demonstrate that investor satisfaction and investment behavior are influenced substantially by the price path by which the final investor return is achieved. In a series of experiments, we analyze various different price paths. Investors are most satisfied if their assets first fall in value and then recover, and they are least satisfied with the opposite pattern, independent of whether the final return is positive or negative. Price paths systematically influence risk preferences, return beliefs, and ultimately trading decisions. Our results enable a much more holistic perspective on a wide range of topics in finance, such as the disposition effect, risk-taking behavior after previous gains and losses, and behavioral asset pricing.Keywords: investor satisfaction, reference points, risk tolerance, investor behavior, experimental finance JEL classification: D14, D81, G11 * The authors thank Charlotte Borsboom, Thorsten Hens, Jürgen Huber, Danling Jiang, Michael Kirchler, Thomas Langer, Amos Nadler, Alexandra Niessen-Ruenzi, Michaela Pagel, Hersh Shefrin, Martin Weber as well as participants of the following university research seminars and conferences for helpful comments and suggestions:

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“…It is believed that life satisfaction is the broad concept that comprise of judgmental factors about an individual`s life. In terms of investor life satisfaction, Merkle et al (2015) found that investors tend to be happy when they have achieved success in trading through the active decision making rather than passive decision making. In addition, Merkle et al (2015) contends that investor life satisfaction can be derived from relative comparison amongst investors.…”

Section: Literature Reviewmentioning

confidence: 99%

“…In terms of investor life satisfaction, Merkle et al (2015) found that investors tend to be happy when they have achieved success in trading through the active decision making rather than passive decision making. In addition, Merkle et al (2015) contends that investor life satisfaction can be derived from relative comparison amongst investors. Thus, generated overspending, but closely applied to the performance of the investment.…”

Section: Literature Reviewmentioning

confidence: 99%

“…Thus, the ultimate goals sought out by human beings are happiness. Merkle, Egan, and Davies (2015) maintain that the happiness of investors is often perceived only as a consequence of spending opportunities that originate from the returns of investing. What constitutes a good quality of life, satisfaction with life as well as financial well-being remains to be variant in a wide range of research studies.…”

Section: Introductionmentioning

confidence: 99%

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Income and Subjective Financial Well-Being as Determining Factors of Life Satisfaction

Koekemoer

Munyai

2019

JEBS

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The purpose of the investment is to improve the current level of life satisfaction by achieving investment goals. Investors tend to attain high levels of life satisfaction when their investment goals are achieved and lower levels of life satisfaction when goals are far from achievement. The idiosyncratic characteristics of an individual may often hamper the achievement of investment goals and ultimately influence the level of life satisfaction. These characteristics can either contribute towards low life satisfaction or high life satisfaction. Income and the subjective financial well-being play a determining role in whether an investor has a positive or negative life satisfaction. Hence, the aim of this study was to determine whether income and subjective financial well-being have an influence on the life satisfaction of investors. The results of this study reveal that a strong relationship exists between income, financial well-being, and life satisfaction. Investors who perceived themselves, to have high financial well-being were more likely to have high life satisfaction. On the contrary, investors with low perceived financial well-being were more likely to have low life satisfaction. Similar results were observed for income and life satisfaction since a positive relationship was also found.

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Investor Happiness

Cited by 7 publications

References 27 publications

Do retail investors bite off more than they can chew? A close look at their return objectives

Do retail investors bite off more than they can chew? A close look at their return objectives

All’s well that ends well? On the importance of how returns are achieved

Income and Subjective Financial Well-Being as Determining Factors of Life Satisfaction

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