The genetics of investment biases

Henrik Cronqvist and Stephan Siegel ()

Journal of Financial Economics, 2014, vol. 113, issue 2, 215-234

Abstract: For a long list of investment “biases,” including lack of diversification, excessive trading, and the disposition effect, we find that genetic differences explain up to 45% of the remaining variation across individual investors, after controlling for observable individual characteristics. The evidence is consistent with a view that investment biases are manifestations of innate and evolutionary ancient features of human behavior. We find that work experience with finance reduces genetic predispositions to investment biases. Finally, we find that even genetically identical investors, who grew up in the same family environment, often differ substantially in their investment behaviors due to individual-specific experiences or events.

Keywords: Investment biases; Behavioral genetics; Portfolio choice (search for similar items in EconPapers)
JEL-codes: D10 D31 G11 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (45)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinec:v:113:y:2014:i:2:p:215-234

DOI: 10.1016/j.jfineco.2014.04.004

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