Personality traits as predictor of cognitive biases : moderating role of risk-attitude
(2020) In Qualitative Research in Financial Markets 12(4). p.465-484- Abstract
Purpose: This study aims to examine that personality traits are associated with the investor’s ability to exhibit disposition effect, herding behavior and overconfidence. It also explores how risk-attitude can modify investor behavior by moderating the association between personality traits, disposition effect, herding and overconfidence.
Design/methodology/approach: Data were collected from 396 respondents by using personally administrated survey. Confirmatory factor analysis (CFA) was used to confirm the validity and reliability of data. Regression analysis was used to test the proposed hypotheses.
Findings: The results supported the proposed hypotheses and showed that extravert investors were more likely to... (More)Purpose: This study aims to examine that personality traits are associated with the investor’s ability to exhibit disposition effect, herding behavior and overconfidence. It also explores how risk-attitude can modify investor behavior by moderating the association between personality traits, disposition effect, herding and overconfidence.
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Design/methodology/approach: Data were collected from 396 respondents by using personally administrated survey. Confirmatory factor analysis (CFA) was used to confirm the validity and reliability of data. Regression analysis was used to test the proposed hypotheses.
Findings: The results supported the proposed hypotheses and showed that extravert investors were more likely to exhibit disposition effect, herding and overconfidence. The conscientiousness trait was associated with disposition effect and overconfidence, while neuroticism was associated with herding behavior. The results confirmed the moderating effect of risk aversion on the association between personality traits, disposition effect, herding and overconfidence.
Originality/value: This study demonstrates how risk aversion modes the strength of association between psychological characteristics (represented by personality traits) and cognitive biases (disposition effect, herding and overconfidence). The results support the “auction” interpretation of investors' behavior by suggesting that personality traits are associated with investment decision-making and that investors are marginal price setters.
- author
- Ahmad, Fawad LU
- publishing date
- 2020-10-24
- type
- Contribution to journal
- publication status
- published
- subject
- keywords
- Auction interpretation, Biases, Personality traits, Risk-attitude
- in
- Qualitative Research in Financial Markets
- volume
- 12
- issue
- 4
- pages
- 20 pages
- publisher
- Emerald Group Publishing Limited
- external identifiers
-
- scopus:85086335786
- ISSN
- 1755-4179
- DOI
- 10.1108/QRFM-10-2019-0123
- language
- English
- LU publication?
- no
- additional info
- Publisher Copyright: © 2020, Emerald Publishing Limited.
- id
- cc79a11d-47aa-4c05-85cb-df9f2574680b
- date added to LUP
- 2024-09-14 22:18:00
- date last changed
- 2024-09-16 10:18:58
@article{cc79a11d-47aa-4c05-85cb-df9f2574680b,
abstract = {{<p>Purpose: This study aims to examine that personality traits are associated with the investor’s ability to exhibit disposition effect, herding behavior and overconfidence. It also explores how risk-attitude can modify investor behavior by moderating the association between personality traits, disposition effect, herding and overconfidence. <br/><br/>Design/methodology/approach: Data were collected from 396 respondents by using personally administrated survey. Confirmatory factor analysis (CFA) was used to confirm the validity and reliability of data. Regression analysis was used to test the proposed hypotheses. <br/><br/>Findings: The results supported the proposed hypotheses and showed that extravert investors were more likely to exhibit disposition effect, herding and overconfidence. The conscientiousness trait was associated with disposition effect and overconfidence, while neuroticism was associated with herding behavior. The results confirmed the moderating effect of risk aversion on the association between personality traits, disposition effect, herding and overconfidence. <br/><br/>Originality/value: This study demonstrates how risk aversion modes the strength of association between psychological characteristics (represented by personality traits) and cognitive biases (disposition effect, herding and overconfidence). The results support the “auction” interpretation of investors' behavior by suggesting that personality traits are associated with investment decision-making and that investors are marginal price setters.</p>}},
author = {{Ahmad, Fawad}},
issn = {{1755-4179}},
keywords = {{Auction interpretation; Biases; Personality traits; Risk-attitude}},
language = {{eng}},
month = {{10}},
number = {{4}},
pages = {{465--484}},
publisher = {{Emerald Group Publishing Limited}},
series = {{Qualitative Research in Financial Markets}},
title = {{Personality traits as predictor of cognitive biases : moderating role of risk-attitude}},
url = {{http://dx.doi.org/10.1108/QRFM-10-2019-0123}},
doi = {{10.1108/QRFM-10-2019-0123}},
volume = {{12}},
year = {{2020}},
}