Personality Traits and Susceptibility to Behavioral Biases among a Sample of Polish Stock Market Investors

Rzeszutek, Marcin

doi:10.1515/ijme-2015-0029

Cited by 12 publications

(14 citation statements)

References 37 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…Our sample contained 84 participants who completed all the tasks and passed the attention checks. Thus, our sample size is similar to previous studies on similar research questions, such as Rzeszutek (2015) with 90 participants or Liêu and Pelster (2020b) with 81 participants.…”

Section: Data Collectionsupporting

confidence: 70%

The disposition effect and admiration seeking

Max

Liêu

2021

Rev Financ Econ

View full text Add to dashboard Cite

This paper examines the relationship between the disposition effect and personality traits and aims to find an additional explanation of this bias in a willingness to pay for admiration. We conduct a personality assessment, a stock trading game and a sealed‐bid English auction for 84 individual investors. The gathered data correspond with the literature on a descriptive level; however, even though admiration‐seeking behavior is an important part of social interaction, there is no significant willingness to pay for it. Furthermore, we do not see any influence of personality on the disposition effect. Our findings add to the ongoing discussion of personality traits in connection with behavioral biases.

show abstract

Section: Data Collectionsupporting

confidence: 70%

The disposition effect and admiration seeking

Max

Liêu

2021

Rev Financ Econ

View full text Add to dashboard Cite

show abstract

“…Literature on behavioural finance has tried to analyse the behaviour of investors in an effort to improve our understanding on how investors manage their investments (Fatima et al , 2018; Chen et al , 2018; Oehler et al , 2018). Today research has shown how personal characteristics of an individual influence his/her behaviour, perception towards risk and willingness to take risky decisions (Rzeszutek, 2015; Rzeszutek et al , 2015). However, the extent to which these personal characteristics influence investment behaviours and IP has largely remained uninvestigated.…”

Section: Literature Reviewmentioning

confidence: 99%

Investor personality and investment performance: from the perspective of psychological traits

Akhtar

Das

2020

QRFM

View full text Add to dashboard Cite

Purpose The purpose of this study is to analyse the mediation effect of psychological biases, namely, financial risk tolerance (FRT) and financial overconfidence on the relationship between personality traits of individual investors and their investment performance (perceived) in the context of a developing financial market such as Indian Capital Markets. Design/methodology/approach The study uses both quantitative and cross-sectional approach to collect response from 983 individual investors through a questionnaire. The questionnaire had segments that were designed to assess their personality traits, investment performance and psychological traits. The personality traits were assessed through Big-Five personality inventory (TIPI), the psychological traits, i.e. FRT was measured through FRT scale, whereas financial overconfidence was measured through three basic concepts, namely, over-precision, over-placement and overestimation. Investment performance was assessed through perceived investment performance measures. The collected data was then analysed through AMOS and SPSS to validate the hypothesised relationship. Findings Findings of the study depict that personality traits of individual investors are related with their FRT, financial overconfidence and perceived investment performance. In addition, FRT and financial overconfidence are negatively related to perceived investment performance. Furthermore, mediation analysis showed that the two psychological traits were found to fully mediate the relationship between personality traits and investment performance. Research limitations/implications There are still certain limitations of the present study. First, the questionnaire pre-testing and sampling technique allowed for only for those investors who had an experience of investment in financial markets; however, the quantification of actual investment performance for each investor was impossible, and thus the actual investment performance was not determined. Second, this study focusses on the mediating role of financial overconfidence and financial risk-taking, as such it is known that levels of financial overconfidence and risk-taking depend on many other extraneous factors such as socio-economic status and financial knowledge. Practical implications The findings of the present study is useful for financial companies, policymakers as well as issuers of financial securities, who can keep a watch on these behaviour-related traits before issuing a security in the financial market and for the financial service providers; this study would be beneficial to design a “behavioural portfolio” according to the personality and psychological traits of their clients. Social implications Through this study, the investors can recognise their personality traits and psychological biases and take sound and good investment decisions and can also maximise their level of overconfidence. This increased level of overconfidence will propel them further to actively and frequently participate in financial markets and make financial gains. Originality/value The essence of this paper lies in the identification of personality traits and psychological traits of individual investors, and their relationship with investment performance. Studies such as this are less prevalent in the context of a developing country such as India. Moreover, to the best of the authors’ knowledge, this paper is first of its kind to study the meditating effect of psychological biases in the relationship between personality traits and investment performance.

show abstract

“…The literature on individual personality traits often focuses narrowly on specific areas such as portfolio selection (Hunter and Kemp, 2004;Bucciol and Zarri, 2015), risk tolerance and investment management (Statman and Wood, 2004;Borghans et al, 2008;Mayfield et al, 2008;Ferguson et al, 2011;Pak and Mahmood, 2015) and money management and financial satisfaction (Ksendzova et al, 2017;Donnelly et al, 2012;Davis and Runyan, 2016). However, few studies focus on the relation between personality traits and exposure to different behavioral biases among stock market investors (Durand et al, 2008;Baddeley et al, 2010;Lin, 2011;Sadi et al, 2011;Zaidi and Tauni, 2012;Rzeszutek, 2015).…”

Section: Personality Traits and Investment Decisionsmentioning

confidence: 99%

“…Baddeley et al (2010) identify an association between Eysenck and Eysenck's (1978) personality traits (impulsivity, venturesomeness and empathy) and the susceptibility to herding behavior among British investors. Similarly, Rzeszutek (2015) investigates whether susceptibility to selected behavioral biases (overconfidence, mental accounting and the sunkcost fallacy) is correlated with Eysenck and Eysenck's personality traits.…”

Section: Personality Traits and Investment Decisionsmentioning

confidence: 99%

Personality traits and investor sentiment

Baker

Kumar

Goyal

2019

RBF

View full text Add to dashboard Cite

Purpose This paper examines the relation between the Big Five model of personality traits and behavioral biases (overconfidence, disposition effect, anchoring, representativeness, metal accounting, emotional bias and herding) of Indian individual investors when making investment decisions. Design/methodology/approach The authors use a structured questionnaire to obtain responses from 515 stock investors in India between August 2016 and January 2017. Based on components identified through factor analysis, the authors use structural equation modeling to examine the effect of specific personality traits. Findings The findings indicate a significant association between the traits of neuroticism, extroversion and conscientiousness as well as behavioral biases of individual investors. Openness has a significant relation with only mental accounting and the agreeableness trait has no relation with the behavioral biases examined. Research limitations/implications The findings imply that understanding investor personality differences and investment psychology can help financial advisors and wealth managers modify products and services to better suit client needs. Originality/value To the best of the authors’ knowledge, no previous study has examined the impact of the Big Five model of personality traits on various behavioral biases among Indian investors.

show abstract

Personality Traits and Susceptibility to Behavioral Biases among a Sample of Polish Stock Market Investors

Cited by 12 publications

References 37 publications

The disposition effect and admiration seeking

The disposition effect and admiration seeking

Investor personality and investment performance: from the perspective of psychological traits

Personality traits and investor sentiment

Contact Info

Product

Resources

About