The underlying motivational process behind portfolio diversification choice decisions of individual investors: An experimental design

Atri Sengupta, Soumya Guha Deb and Shashank Mittal ()

Journal of Behavioral and Experimental Finance, 2021, vol. 29, issue C

Abstract: The present study explores the underlying motivational process and their boundary conditions behind portfolio (asset class) diversification choice decisions through the lenses of ‘regulatory focus’ and ‘regulatory fit’ theories. The study specifically focuses on how such choice decisions differ across chronic (trait) and situational (state) goal-orientation conditions. We use an experimental research design with a survey-based sample of 586 respondents and a two-way ANOVA test for analyzing data collected in two phases. Our principal findings are as follows: (i) investors with chronic promotion (prevention) conditions adopt wider (narrower) portfolio choices; (ii) in convergent promotion (prevention) conditions, they espouse wider (narrower) portfolio choices as compared to the chronic conditions; and (iii) in convergent promotion (prevention) conditions, they prefer wider (narrower) choices than in the divergent conditions. We support our findings by a detailed discussion along with the theoretical and managerial implications.

Keywords: Chronic regulatory focus; Situational regulatory focus; Regulatory fit; Portfolio diversification choice decisions (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S2214635020303816

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:beexfi:v:29:y:2021:i:c:s2214635020303816

DOI: 10.1016/j.jbef.2020.100452

Access Statistics for this article

Journal of Behavioral and Experimental Finance is currently edited by Michael Dowling and Jürgen Huber

More articles in Journal of Behavioral and Experimental Finance from Elsevier
Bibliographic data for series maintained by Catherine Liu ().