The meerkat effect: Personality and market returns affect investors’ portfolio monitoring behaviour

Svetlana Gherzi, Daniel Egan, Neil Stewart, Emily Haisley and Peter Ayton

Journal of Economic Behavior & Organization, 2014, vol. 107, issue PB, 512-526

Abstract: Karlsson, Loewenstein and Seppi (2009) found that, following market downswings, investors are less likely to login to monitor their retirement portfolios. They concluded that, rather like (apocryphal) ostriches sticking their heads in the sand, investors avoid unpleasant information by reducing portfolio monitoring in response to news of negative market movement. We apply generalised non-linear mixed effects models to test for this selective information monitoring at an individual level in a new sample of active online investors. We see different behaviour in this new sample. We find that investors increase their portfolio monitoring following both positive and daily negative market returns, behaving more like hyper-vigilant meerkats than head-in-the-sand ostriches. This pattern persists for logins not resulting in trades and weekend logins when markets are closed. Moreover, an investor personality trait – neuroticism – moderates the pattern of portfolio monitoring suggesting that market – driven variation in portfolio monitoring is attributable to psychological factors.

Keywords: Behavioural finance; Individual investors; Selective attention; Personality; Investment decisions; Ostrich effect (search for similar items in EconPapers)
JEL-codes: D81 D82 G02 G14 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (21)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:107:y:2014:i:pb:p:512-526

DOI: 10.1016/j.jebo.2014.07.013

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