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Impacts of Personality on Herding in Financial Decision-Making

Michelle Baddeley, Christopher Burke, Wolfram Schultz and Phillipe Tobler

Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge

Abstract: Experimental analyses have identified significant tendencies for individuals to follow herd decisions, a finding which has been explained using Bayesian principles of statistical inference. This paper outlines the results from a herding task designed to extend these analyses. Empirically, we estimate logistic functions using panel fixed effect estimation techniques to quantify the impact of herd decisions on individuals‘ decisions about whether or not to buy a financial asset. We confirm that there are statistically significant propensities to herd and that social information about others‘ decisions has an impact on individuals‘ decisions. We extend these findings by identifying associations between herding propensities and individual characteristics such as gender, age and specific personality traits including impulsivity and venturesomeness.

Keywords: herding; social influence; financial decision making; personality (search for similar items in EconPapers)
JEL-codes: C92 D03 D81 G14 (search for similar items in EconPapers)
Date: 2010-01-22
New Economics Papers: this item is included in nep-cbe, nep-exp and nep-net
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Citations: View citations in EconPapers (10)

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