Personality differences and investment decision-making

Zhengyang Jiang, Cameron Peng, Hongjun Yan

Research output: Contribution to journalArticlepeer-review

9 Scopus citations

Abstract

We survey thousands of affluent American investors to examine the relationship between personalities and investment decisions. The Big Five personality traits correlate with investors' beliefs about the stock market and economy, risk preferences, and social interaction tendencies. Two personality traits, Neuroticism and Openness, stand out in their explanatory power for equity investments. Investors with high Neuroticism and those with low Openness tend to allocate less investment to equities. We examine the underlying mechanisms and find evidence for both standard channels of preferences and beliefs and other nonstandard channels. We show consistent out-of-sample evidence in representative panels of Australian and German households.

Original languageEnglish (US)
Article number103776
JournalJournal of Financial Economics
Volume153
DOIs
StatePublished - Mar 2024

Keywords

  • Investor heterogeneity
  • Personality
  • Social interaction

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics
  • Strategy and Management

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