Investors' Personality Influences Investment Decisions: Experimental Evidence on Extraversion and Neuroticism

Oehler, Andreas; Wendt, Stefan; Wedlich, Florian; Horn, Matthias

doi:10.1080/15427560.2017.1366495

Cited by 140 publications

(139 citation statements)

References 69 publications

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“…We observe a similar gender effect for investments with a high risk and return for Canadian, Danish and German students. These results are in line with the findings of Oehler et al (, ), who note that, on average, females show a higher degree of risk aversion in investment decisions than males. However, since we do not observe any statistically significant gender differences for the remaining financial products, we do not think that this effect significantly skews our results.…”

Section: Resultssupporting

confidence: 92%

Young Adults and Their Finances: An International Comparative Study on Applied Financial Literacy

et al. 2017

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Recent years have brought a gradual shift of responsibility for pension provisions, financial planning, health care and various insurances from governmental institutions and firms to individuals. To tackle this challenge, individuals need applied financial literacy and not merely theoretical knowledge about financial products and mechanisms that does not reflect real‐life situations. We survey 448 business students in Canada, Denmark, Germany and Iceland to examine how financial literacy is expressed in their financial portfolios. We contrast these findings with the respondents' own expectations and needs. The results show that most respondents exhibit good financial literacy as well as a realistic assessment of risk and return and their impact on (financial) well‐being.

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Section: Resultssupporting

confidence: 92%

Young Adults and Their Finances: An International Comparative Study on Applied Financial Literacy

et al. 2017

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“…What is noteworthy is that, considering that around 80% to 90% of individuals that actively invest in securities are male 17 , and the fact that investors work under great stress (e.g., Oberlechner & Nimgade, 2005), the results of both analyses are essentially consistent. Thus, this study generally supports the notion that the investment and saving patterns we might observe at the aggregate and individual level can be the result of variation in personality, contributing to a growing literature (e.g., Nyhus & Webley, 2001;Brown & Taylor, 2014;Niszczota, 2014;Oehler, Wendt, Wedlich, & Horn, 2017).…”

Section: Discussionsupporting

confidence: 86%

Neuroticism and home bias

Niszczota¹

2020

Preprint

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In this paper I investigate whether neuroticism has a negative impact on investment in foreign securities, exacerbating the ‘home bias’ present while investing in stocks and bonds. This hypothesis is motivated by research which: (1) established a link between neuroticism and fear of uncertainty, (2) revealed that investors feel greater uncertainty when considering investment in foreign securities, and (3) shown that negative affect impacts in-group bias. I explore this hypothesis on both the country level (using cross-country observational data) and individual level (using the responses of students that were given a hypothetical investment scenario). Additionally, I explore whether the predicted relationship is further exacerbated when uncertainty or anxiety is high, or when the investment destination is dissimilar from the investors’ own country. The country-level analysis reveals that investors from high-neuroticism countries generally invest less in foreign equities than investors from other countries, and provides some support that this tendency can become more pronounced when investing in times of high uncertainty or in culturally dissimilar countries. The hypothesized relationship is also present in the responses of male students in a high-anxiety (stressful) condition. Given that professional investors are predominantly male, and work under high stress, this explains to some extent why investors have a bias towards domestic securities.

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“…As a result, these investors are willing to accept a portion of returns from irregular capital gains and are comfortable to take risks (Dow, 1998). To conclude, growth investors attempt to outperform the market to realise higher returns on investment portfolios (Oehler et al, 2018).…”

Section: Literature Reviewmentioning

confidence: 99%

Establishing a link between risk tolerance, investor personality and behavioural finance in South Africa

Dickason-Koekemoer

Ferreira-Schenk

2018

Cogent Economics & Finance

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Investors' Personality Influences Investment Decisions: Experimental Evidence on Extraversion and Neuroticism

Cited by 140 publications

References 69 publications

Young Adults and Their Finances: An International Comparative Study on Applied Financial Literacy

Young Adults and Their Finances: An International Comparative Study on Applied Financial Literacy

Neuroticism and home bias

Establishing a link between risk tolerance, investor personality and behavioural finance in South Africa

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