An Intimate Portrait of the Individual Investor

Durand, Robert B.; Newby, R.A.; Sanghani, Jay P

doi:10.2139/ssrn.887441

Cited by 47 publications

(114 citation statements)

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“…There is copious empirical and experimental evidence that higher risk propensity is accompanied by an increase in trade frequency, and on the contrary, higher risk aversion manifests itself in lower market activity (Durand, Newby, & Sanghani, 2008;Fellner & Maciejovsky, 2007;Markiewicz & Weber, 2013;Robin, Straznicka, & Villeval, 2012). Overconfidence, however, is a factor that induces active engagement in trading (see above).…”

Section: Introductionmentioning

confidence: 99%

Overconfidence, risk aversion and individual financial decisions in experimental asset markets

Michailova

Mačiulis²,

Tvaronavičienė

2017

Economic Research-Ekonomska Istraživanja

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Prior experiments revealed that investors' overconfidence can result in excessive trade and negative wealth effects. However, in most of these studies, informational asymmetries were part of the experimental design, and therefore no clear conclusion on whether the obtained results were driven by overconfidence or informational asymmetries could be made. The article addresses this issue by analysing individual financial decisions based on the study of Michailova and Schmidt, who ran an asset markets experiment with no informational asymmetries. Additionally, the study controls for differences in individual risk aversion. The data revealed that, in this setting, individual trading activity and performance were influenced by overconfidence only for female participants. Mistakes in future price forecasting, which were negatively correlated with overconfidence, partially accounted for this result. Risk aversion was uncorrelated with overconfidence and had no influence on experimental outcomes.

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Section: Introductionmentioning

confidence: 99%

Overconfidence, risk aversion and individual financial decisions in experimental asset markets

Michailova

Mačiulis²,

Tvaronavičienė

2017

Economic Research-Ekonomska Istraživanja

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“…Durand, Newby, Peggs, and Siekierka (2013) find that the "availability heuristic" and the "disposition effect" are related to student investors' personality in Australia. By applying "Norman's Big Five Preference for Innovation" and the propensity for risk-taking from "Jackson's Personality Inventory" as well as "Bem's Sex-Role Inventory", their study lends support to the earlier study conducted by Durand, Newby, & Sanghani, (2008). Few studies attempt to investigate the investment behavior in Malaysia.…”

Section: Risk-takingmentioning

confidence: 63%

Are the Effects of Age Still Relevant in Predicting Malaysian Investors’ Risk-Taking Behavior in Stock Market?

Chin¹,

Shahzad²

2018

IJET

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The role of age in moderating investor’s self-confidence bias, herding, conservatism bias, familiarity bias, and regret in risk-taking behavior is explored using data collected from retail investors in Melaka, Selangor, and Wilayah Persekutuan (W.P.) Kuala Lumpur. As indicated in data analysis by Partial Least Squares Structural Equation Modelling (PLS-SEM), age plays an important moderating role in herding, regret, and self-confidence bias in investor’s risk-taking behavior. While younger investors who tend to herd are more risk averse and feel more regret in risk-taking than the older group, older investors seem to exhibit a higher level of self-confidence bias than younger investors. However, the risk- taking distribution between the age groups indicates no significant difference. Thus, the readiness in greater levels of risk acceptance depends on the individuals’ preference towards herding, regret, and self-confidence bias. Furthermore, this study also address contradictions in the existing literatures that fuels stereotyping and discrimination based on age. Therefore, age stereotype should be avoided when formulating microstructure strategies to raise the investor’s participation in the stock market.

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“…However, as with investment biases, personality traits are related to financial decision-making. Durand et al (2008) show that several normal personality factors (such as extraversion, conscientiousness, and masculinity), are related to trading frequency and the proportion of shares invested in the market portfolio. 4 Additionally, Durand et al (2008) show that investor personality is related to investment outcomes, including return, realized risk, and risk-adjusted return.…”

Section: Portrayal Of Investor Psychobiology In the Literaturementioning

confidence: 99%

“…Durand et al (2008) show that several normal personality factors (such as extraversion, conscientiousness, and masculinity), are related to trading frequency and the proportion of shares invested in the market portfolio. 4 Additionally, Durand et al (2008) show that investor personality is related to investment outcomes, including return, realized risk, and risk-adjusted return. One explanation for their results is that personality factors help to shape financial preferences, and thereby influence the ensuing investment performance.…”

Section: Portrayal Of Investor Psychobiology In the Literaturementioning

confidence: 99%

“…Similarly, the terms "abnormal personality" and "mental health" are commonly substituted for each other. Durand et al (2008) and Durand et al (2010) as foundations, in that they study the link between Norman's Big Five dimensions of personality (i.e., negative emotions, extroversion, openness to experience, agreeableness and conscientiousness) and investor financial choices and investment performance.…”

Section: Introductionmentioning

confidence: 99%

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The Relation of Steroid Hormones and Personality Factors to Financial Performance and Risk-Taking Behavior

Patterson¹

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An Intimate Portrait of the Individual Investor

Cited by 47 publications

References 0 publications

Overconfidence, risk aversion and individual financial decisions in experimental asset markets

Overconfidence, risk aversion and individual financial decisions in experimental asset markets

Are the Effects of Age Still Relevant in Predicting Malaysian Investors’ Risk-Taking Behavior in Stock Market?

The Relation of Steroid Hormones and Personality Factors to Financial Performance and Risk-Taking Behavior

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