Attitudes to Economic Risk Taking, Sensation Seeking and Values of Business Students Specializing in Finance

Sjöberg, Lennart; Engelberg, Elisabeth

doi:10.1080/15427560902728712

Cited by 62 publications

(52 citation statements)

References 64 publications

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“…High-sensation seekers also exhibit more risk-taking behavior in financial matters, including more frequent equity trading than low-sensation seekers (Grinblatt and Keloharju 2009). Sjöberg and Engelberg (2009) found that the students of finance had a positive attitude to economic risk-taking and gambling behavior and have a high level of sensation seeking. Brown (1990a, 1990b) drew students' blood and measured biochemical markers (e.g., MAO level), finding a relationship between biochemistry, sensation seeking, and financial risk taking.…”

Section: Financial Risk Takingmentioning

confidence: 99%

Empirical Evidence on the Use of Credit Scoring for Predicting Insurance Losses with Psycho-social and Biochemical Explanations

Golden

Brockett

et al. 2016

North American Actuarial Journal

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An important development in personal lines of insurance in the UnitedStates is the use of credit history data for insurance risk classification to predict losses. This research presents the results of collaboration with industry conducted by a university at the request of its state legislature. The purpose was to see the viability and validity of the use of credit scoring to predict insurance losses given its controversial nature and criticism as redundant of other predictive variables currently used. Working with industry and government, this study analyzed more than 175,000 policyholders' information for the relationship between credit score and claims. Credit scores were significantly related to incurred losses, evidencing both statistical and practical significance. We investigate whether the revealed relationship between credit score and incurred losses was explainable by overlap with existing underwriting variables or whether the credit score adds new information about losses not contained in existing underwriting variables. The results show that credit scores contain significant information not already incorporated into other traditional rating variables (e.g., age, sex, driving history). We discuss how sensation seeking and self-control theory provide a partial explanation of why credit scoring works (the psycho-social perspective). This article also presents an overview of biological and chemical correlates of risk taking that helps explain why knowing risk-taking behavior in one realm (e.g., risky financial behavior and poor credit history) transits to predicting risk-taking behavior in other realms (e.g., automobile insurance incurred losses). Additional research is needed to advance new nontraditional loss prediction variables from social media consumer information to using information provided by technological advances. The evolving and dynamic nature of the insurance marketplace makes it imperative that professionals continue to evolve predictive variables and for academics to assist with understanding the whys of the relationships through theory development.

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Section: Financial Risk Takingmentioning

confidence: 99%

Empirical Evidence on the Use of Credit Scoring for Predicting Insurance Losses with Psycho-social and Biochemical Explanations

Golden

Brockett

et al. 2016

North American Actuarial Journal

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“…This was also found in an examination of long term investment strategies for clients in regards to their retirement investment (Ameriks et al, 2009). Thus, impulsivity and sensation seeking, which often characterize trader personality (Sjöberg and Engelberg, 2009), may have to be reconsidered. Finally, both optimism and anxiety have more complex relationships to risk taking and adaptation than previously thought, and the widely held belief that optimism is a positive and anxiety a negative trait for investment may prove to be false.…”

Section: Discussionmentioning

confidence: 99%

“…If we observe differences, we will explore whether these are due to different personality profiles or due to experience and training specific to professionals. As previous research has suggested (Sjöberg and Engelberg, 2009), professionals in the financial industry tend to be a self-selected sample characterized by certain personality traits enabling them to take high risks. Thus, we expect professionals to be less anxious and more optimistic than our student population.…”

Section: Predictions and Hypothesismentioning

confidence: 99%

How to Adapt to Changing Markets: Experience and Personality in a Repeated Investment Game

Hopfensitz

Wranik

2009

SSRN Journal

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Investment behavior is traditionally investigated with the assumption that risky investment is on average advantageous. However, this may not always be the case. In this paper, we experimentally studied investment choices made by students and financial professionals under favorable and unfavorable market conditions in a multi-round investment game. In particular, the probability of winning was set so that investment in one condition was advantageous, and in one condition was disadvantageous.To investigate who is more likely to adapt their investment behaviors to the changing market conditions, we also measured personality and self-efficacy. We expected that investment behavior in changing markets could be predicted by a combination of experience (students, professionals), personality (anxiety, optimism, impulsivity, and Openness to Experience), and self-efficacy (belief in one's ability to make good decisions in an investment task).Results indicate that professionals do not significantly differ from students in their decisions.Personality and self-efficacy both predicted investment behavior. In particular, we found that optimism and anxiety were a liability in unfavorable markets, leading to unreasonable levels of risk. Impulsivity was a liability in both favorable and unfavorable markets, leading to high risk on unfavorable markets, and low risk in favorable markets. Openness to experience was an asset in unfavorable markets, leading to adjusted risk taking. Finally, self-efficacy was generally related to higher levels of risk.

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“…De hecho, ya se acepta de forma generalizada que es mucho más importante la forma en que procesamos la información que recibimos y las expectativas que generamos a partir de ella que la propia información (Oberlechner & Hoking, 2004). Tanto los asesores como los inversores están de acuerdo en que los factores psicológicos juegan un papel muy importante en el comportamiento de los inversores a partir de los consejos obtenidos por los asesores (Sjoberg & Engelberg, 2006). Los estudios de Hilton (2001) y Slovic (2001 avalan esta creencia popular.…”

Section: Discusión Y Conclus Ionesunclassified

Economy, psychology and stock investment: analysis of variables that participate in the process of decision making

Pascual‐Ezama

Liaño

Scandroglio

2012

Int. j. psychol. res.

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The ININBE questionnaire has been recently validated in order to measure the variables that affect individual investor behavior in stock exchange. The lack of information about the methodology, items selection and psychometric properties of the instruments used in other researches has shown the necessary to elaborate and validate a questionnaire. In the present work we have applied the ININBE questionnaire to 257 individual investors. We have found interesting results about the relationship between the "psychological" and "economical" variables with individual investor's characteristics.Key Words: Individual investor, economy, psychology, economic psychology, make decisions RESUMENLa escala ININBE, recientemente validada, ha dado respuesta a la necesidad de un instrumento de medición de las variables que utilizan los inversores individuales en su proceso de toma de decisiones, ya que en la mayoría de los estudios no se detalla la metodología empleada para la selección de los ítems que conforman los cuestionarios ni las propiedades psicométricas de los mismos. Además, no se muestra, en términos generales, el cuestionario utilizado ni, en su defecto, la totalidad de los ítems incluidos en el mismo. En este trabajo hemos aplicado el cuestionario ININBE a 257 inversores individuales obteniendo interesantes resultados sobre el papel de las variables "psicológicas" y "económicas" en función de las características los inversores.Palabras Clave: Inversor individual, economía, psicología, psicología económica, toma de decisiones ________________________ Recibido

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Attitudes to Economic Risk Taking, Sensation Seeking and Values of Business Students Specializing in Finance

Cited by 62 publications

References 64 publications

Empirical Evidence on the Use of Credit Scoring for Predicting Insurance Losses with Psycho-social and Biochemical Explanations

Empirical Evidence on the Use of Credit Scoring for Predicting Insurance Losses with Psycho-social and Biochemical Explanations

How to Adapt to Changing Markets: Experience and Personality in a Repeated Investment Game

Economy, psychology and stock investment: analysis of variables that participate in the process of decision making

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