Openness endangers your wealth: Noise trading and the big five

Jens Kleine, Niklas Wagner and Tim Weller

Finance Research Letters, 2016, vol. 16, issue C, 239-247

Abstract: We examine the cross-sectional determinants of individual trading activity based on given Big Five personality traits. Our unique data set is obtained by a self-reported questionnaire with 2147 individual investors. We find that Agreeableness, Extraversion and Openness are central in explaining cross-sectional differences in trading activity. Openness is found to be a main driver of excess trading. Overconfidence as predicted by low levels of Agreeableness relates to excessive trading, while high levels of Extraversion do not. Our performance prediction conditional on investor personality is that Agreeableness saves individual investors from losing money via trading, while Openness will endanger terminal wealth.

Keywords: Individual investors; Noise trading; Overconfidence; Personality traits; Big Five model; Agreeableness; Extraversion; Openness (search for similar items in EconPapers)
JEL-codes: G02 G10 G12 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:16:y:2016:i:c:p:239-247

DOI: 10.1016/j.frl.2015.12.002

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