The abnormal psychology of investment performance

Fernando M. Patterson and Robert T. Daigler

Review of Financial Economics, 2014, vol. 23, issue 2, 55-63

Abstract: We examine a range of mental health characteristics (e.g. depression, paranoia, and schizophrenia) in subjects engaged in simulated investment trading, showing that certain abnormal personality characteristics have a statistically significant association with the degree of investment diversification, the return achieved, the degree of risk undertaken, and the resultant risk-adjusted performance. These financially educated individuals are more paranoid and psychopathically deviant than the average person, with high scores on these characteristics associated with greater risk-taking. Finally, male and female investors possess different mental health strengths and weaknesses in relation to their financial performance.

Keywords: Personality characteristics; Abnormal psychology; Investment performance; Decision-making; Risk-adjusted performance (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:revfin:v:23:y:2014:i:2:p:55-63

DOI: 10.1016/j.rfe.2013.08.004

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