Individual psychology and investment style. (2015)

• Record Type: Journal Article
• Authors: Ackert, Lucy F.; Athanassakos, George; Church, Bryan K.
• Is Part Of: International journal of behavioural accounting and finance. Volume 5:Number 2(2015)
• Page Start: 175
• Page End: 201
• Publication Date: 2015
• Subjects: value investing -- investment styles -- cognitive bias -- individual psychology -- behavioural finance -- growth stocks -- biology -- personality factors -- risk tolerance -- time preference -- overconfidence -- personal evaluation -- investment opportunities -- character strengths -- personal affective assessment; Accounting -- Psychological aspects -- Periodicals; Business enterprises -- Finance -- Psychological aspects -- Periodicals; Investments -- Psychological aspects -- Periodicals; Organizational behavior -- Periodicals; 657.019
• Languages: English
• ISSNs: 1753-1969

Abstract

This paper sheds light on the individual characteristics associated with investment style. A vast literature documents the importance of individual personality in explaining variation in choice, yet many questions remain regarding the determinants of investment choices. We use an experimental method to isolate participants' preference for value vs. growth stocks. Recent research suggests that biology plays a significant role in determining investment style. We extend this research by examining whether measurable behavioural and personality factors predict investment style, including risk tolerance, time preference, overconfidence, personal evaluation of the investment opportunity, and character strengths. Importantly, we find that an individuals' personal affective assessment of an investment opportunity plays a significant role in the determination of investor style.