The abnormal psychology of investment performance

Abstract

We examine a range of mental health characteristics (e.g. depression, paranoia, and schizophrenia) in subjects engaged in simulated investment trading, showing that certain abnormal personality characteristics have a statistically significant association with the degree of investment diversification, the return achieved, the degree of risk undertaken, and the resultant risk‐adjusted performance. These financially educated individuals are more paranoid and psychopathically deviant than the average person, with high scores on these characteristics associated with greater risk‐taking. Finally, male and female investors possess different mental health strengths and weaknesses in relation to their financial performance.

DEEP sleep: The impact of sleep on financial risk taking

“…Second, it can be argued that our sample of finance students provide a better proxy for financial professionals who are more likely to select careers as a financial advisor, trader, or manager than does the general population. Indeed, it is common for financial experiments to use a sample of finance students, or those who have taken finance courses, for the reasons described above (e.g., see Durand, Newby, Peggs, & Siekierka, ; Durand, Newby, Tant, & Trepongkaruna, ; Gajewski, Labelle, Léger, Li, & Sénécal, ; Negrea & Toma, ; Nofsinger et al., ; Patterson & Daigler, ; Shank, among others).…”

Financial Delinquency: Overarching Personality Dispositions and Circumstantial Risk Factors

“…Individuals' financial decision-making is assumingly affected by several psychological factors, including intelligence, ability to make rational decisions, and personality traits (Patterson & Daigler, 2014). The ability to behave rationally has been addressed extensively in the literature, especially since rational decisionmaking is a key assumption in most economic and financial models.…”

nvestigating the Effects of Behavioral Factors on Investment Performance in Nigerian Capital Market

“…According to Agarwal et al (2016), regret aversion may explain the disposition effect. Investor decision-making and the ensuing investment performance is the result of the combined influence of psychological and biological factors of which regret aversion is one important factor (Patterson & Daigler, 2014). The regret aversion nature of investors would make them more analytical which could affect their investment performance.…”