Personality Differences and Investment Decision-Making

Zhengyang Jiang, Cameron Peng and Hongjun Yan

No 31041, NBER Working Papers from National Bureau of Economic Research, Inc

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.

JEL-codes: D91 G11 G41 (search for similar items in EconPapers)
Date: 2023-03
New Economics Papers: this item is included in nep-des and nep-upt
Note: AP
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Published as Zhengyang Jiang & Cameron Peng & Hongjun Yan, 2024. "Personality differences and investment decision-making," Journal of Financial Economics, vol 153.

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