Risk taking, behavioral biases and genes: Results from 149 active investors

Anderson, Anders; Dreber, Anna; Vestman, Roine

doi:10.1016/j.jbef.2015.04.002

Cited by 25 publications

(21 citation statements)

References 22 publications

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“…To our knowledge, our study is the second one that focused on a group of active investors who are experienced in financial decisions and risk-taking. In a previous study, conducted by Anderson et al ( 2015 ), a sample of 140 active investors were examined, and there was no significant relationship between the DRD4 gene and risk-taking in three risk-taking measures: measures of equity holdings, multiple price listing, and the survey risk measure. Also, Dreber et al ( 2012 ) failed to find differences between 7R+ and 7R− when the subject pool was composed of professional decision-makers (i.e., owners, presidents, and managers of large companies).…”

Section: Discussionmentioning

confidence: 88%

“…The results revealed that 7R+ individuals chose risky options in 39% of cases, while 7R− chose risky options in 38% of cases. No differences were also shown between the group of 7R+ and 7R− individual investors in both financial risk-taking task (choices between a certain payoff ranging from $140 to $1000 and a 50:50 gamble between the gain of $1000 or nothing) and measures of equity holdings (based on national registry data on detailed asset holdings; Anderson et al, 2015 ). A lack of differences in risk-taking between 7R+ and 7R− was also observed in a group of owners, presidents and managers of large companies who performed the investment task.…”

Section: Introductionmentioning

confidence: 98%

“…However, some findings revealed a lack of differences. Another four studies failed to find significant differences between 7R+ and 7R− individuals in the domain of financial risk-taking (Eisenegger et al, 2010 ; Frydman et al, 2011 ; Dreber et al, 2012 ; Anderson et al, 2015 ). For example, Frydman et al ( 2011 ) asked subjects to make choices between 140 pairs of monetary gambles.…”

Section: Introductionmentioning

confidence: 99%

“…Additionally, in our study, we wanted to test the differences in risk-taking between 7R+ and 7R− among people who are experienced in financial decision-making and risk-taking (i.e., stock market investors). So far, only three studies have focused on different groups than students (Dreber et al, 2011 , 2012 ; Anderson et al, 2015 ), and testing such a group could give more reliable results than testing just undergraduate students. Moreover, as Dorn and Sengmueller ( 2009 ) revealed, investors who have a tendency to trade excessively (which implies higher costs and in turn increases the risk) report enjoying investing or gambling 1 .…”

Section: Introductionmentioning

confidence: 99%

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The Dopamine Receptor D4 Gene (DRD4) and Financial Risk-Taking: Stimulating and Instrumental Risk-Taking Propensity and Motivation to Engage in Investment Activity

Muda

Kicia

Michalak-Wojnowska

et al. 2018

Front. Behav. Neurosci.

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The Dopamine receptor D4 gene (DRD4) has been previously linked to financial risk-taking propensity. Past works demonstrated that individuals with a specific variant of the DRD4 gene (7R+) are more risk-seeking than people without it (7R−). The most prominent explanation for this effect is the fact that 7R+ individuals are less sensitive to dopamine and thus seek more stimulation to generate “normal” dopaminergic activity and feel pleasure. However, results about this relationship have not been conclusive, and some revealed a lack of the relationship. In the current work, we tested if those unclear results might be explained by the motivation that underlies the risk-taking activity; i.e., if people take risks to feel excitement or if they take risk to obtain a specific goal. In our study we tested the differences in risk-taking between 7R+ and 7R− among people who are experienced in financial risk-taking (113 investors) and non-experienced financial decision makers (104 non-investors). We measured risk-taking propensity with the Holt-Laury test and the Stimulating-Instrumental Risk Inventory. Moreover, we asked investors about their motivations for engaging in investment activity. Our study is the next one to report a lack of differences in risk-taking between 7R+ and 7R− individuals. As well, our results did not indicate any differences between the 7R+ and 7R− investors in motivation to engage in investment activity. We only observed that risk-taking propensity was higher among investors than non-investors and this was noticed for all measures. More research is needed to better understand the genetic foundations of risk-taking, which could answer the question about the substantial variation in the domain of risky financial decisions.

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Section: Discussionmentioning

confidence: 88%

Section: Introductionmentioning

confidence: 98%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

The Dopamine Receptor D4 Gene (DRD4) and Financial Risk-Taking: Stimulating and Instrumental Risk-Taking Propensity and Motivation to Engage in Investment Activity

Muda

Kicia

Michalak-Wojnowska

et al. 2018

Front. Behav. Neurosci.

View full text Add to dashboard Cite

show abstract

“…This variability can come from many sources, including environment, individual personality traits, and differences in brain structure and function. A number of studies have revealed heterogeneity in individuals’ risk tolerance and risk-taking ( Kahneman and Tversky, 1992 ; Barsky et al, 1997 ; Anderson et al, 2015 ). Previous research has explained individual differences from a demographic perspective, such as sex ( Barsky et al, 1997 ; Croson and Gneezy, 2009 ), age ( Barsky et al, 1997 ; Mather et al, 2012 ), race ( Barsky et al, 1997 ; Blum et al, 1999 ), religion ( Barsky et al, 1997 ; Leon and Pfeifer, 2017 ), education, income ( Donkers et al, 2001 ), and so on.…”

Section: Introductionmentioning

confidence: 99%

Can Your DNA Influence Your Bet-Placing? The Impact of Cannabinoid Receptor 1 Gene on Gambling Tasks

Qin

Zeng

Chen

et al. 2018

Front. Hum. Neurosci.

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Are we placing a bet by ourselves or has our DNA already made the decision for us? Previous research has suggested that some genes related to dopamine or serotonin can influence our non-bet-placing decision-making, but little is known about whether cannabinoid-related genes can impact how much people bet. To investigate this issue, we focused on rs1049353, a single-nucleotide polymorphism of the cannabinoid receptor 1 (CNR1), because it is related to addictive behavior and reward processing. In this study (N = 377), we used a modified Cambridge gambling task to test the effect of rs1049353 polymorphism on how much people bet. We found that participants who are homozygous for C allele placed significantly larger bets than C/T carriers [F(1,371) = 7.805, P = 0.005]. We further studied the gene expression map in human brains and found that the CNR1 gene is overexpressed in striatum, amygdala, and hippocampus. These brain structures are known to underpin reward and risk processing. Our findings suggest that, to some extent, high-level social decision-making even like bet-placing could be influenced by a single genetic locus variation in healthy volunteers. In addition, such effects were likely to be mediated by key brain regions in the reward- and risk-processing networks.

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Measuring the role of neurotransmitters in investment decision: A proposed constructs

Khan

Mubarik

2020

Int. J Fin Econ

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The purpose of this study is to develop a reliable and valid neurotransmitter's measurement scale. The developed scale would be instrumental in studying the role of neurotransmitters in financial decisions making. A threefold approach was used to develop and validate the scale. The first stage was a qualitative exploratory step for item generation, second initial purification of the stage 1 findings using exploratory factor analysis, and third was validation of the scale using confirmatory factor analysis. The findings accrued an eight-dimensional second-order model of neurotransmitters (adrenaline, noradrenaline, dopamine, serotonin, GABA, acetylcholine, glutamate, and endorphins), comprising 58 items. The findings of the study provide a suggest that investors and institutions not only to re-define rationality but also to reconsider the effect of neurotransmitters on financial decisions and investment behaviour. This research contributes to the body of knowledge by defining and verifying substantial dimensions of neurotransmitters. In future studies, an eight-dimensional measurement scale could be further used as a research tool to assess how neurotransmitters are involved in our day-to-day financial decisions in different cultures.

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Risk taking, behavioral biases and genes: Results from 149 active investors

Cited by 25 publications

References 22 publications

The Dopamine Receptor D4 Gene (DRD4) and Financial Risk-Taking: Stimulating and Instrumental Risk-Taking Propensity and Motivation to Engage in Investment Activity

The Dopamine Receptor D4 Gene (DRD4) and Financial Risk-Taking: Stimulating and Instrumental Risk-Taking Propensity and Motivation to Engage in Investment Activity

Can Your DNA Influence Your Bet-Placing? The Impact of Cannabinoid Receptor 1 Gene on Gambling Tasks

Measuring the role of neurotransmitters in investment decision: A proposed constructs

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