Personality traits and investor profile analysis: A behavioral finance study

• Published in: PloS one Vol. 14; no. 3; p. e0214062
• Main Authors: De Bortoli, Daiane, da Costa, Jr, Newton, Goulart, Marco, Campara, Jéssica
• Format: Journal Article
• Language: English
• Published: United States Public Library of Science 27-03-2019; Public Library of Science (PLoS)
• Subjects: Adult; Analysis; Behavior; Behavioral economics; Biology and Life Sciences; Brazil; Cognitive ability; Computer Simulation; Decision Making; Decision theory; Decisions; Economics; Economics, Behavioral; Female; Financial institutions; Financial instruments; Financing; Health maintenance organizations; Health risk assessment; Humans; Investment; Investments; Logistic Models; Male; Middle Aged; Models, Economic; Models, Psychological; Personality; Personality tests; Personality traits; Physical Sciences; Proxy; Questionnaires; Regression analysis; Research and Analysis Methods; Risk assessment; Risk taking; Social Sciences; Statistical analysis; Studies; Surveys and Questionnaires; Young Adult; Brazil
• ISSN: 1932-6203; 1932-6203
• DOI: 10.1371/journal.pone.0214062

This study investigates which of four paradigms best portrays the risk profile manifest by investors in their financial asset investment decisions. The paradigms used to explain this profile were: prospect theory, investor profile analysis (IPA), the Big Five Personality Test, and the Cognitive Reflection Test (CRT). The choice of proxy for the risk preferences (profile) of a typical investor was defined by simulating investments in a laboratory setting. The results are analyzed using ordered logistic regression and show that people who have greater risk tolerance according to IPA, who violate prospect theory, and who have a high degree of openness to experience have the greatest probability of taking higher levels of risk in their investment decisions. With regard to the CRT, higher numbers of correct responses in this test has an inverse relationship with risk taking.