TITLE:
Role of Optimism Bias and Risk Attitude on Investment Behaviour
AUTHORS:
Divya Gakhar
KEYWORDS:
Investment Behavior, Investment Avenues, MBTI, Demographic Factors, Optimism Bias, Risk Taking Behavior
JOURNAL NAME:
Theoretical Economics Letters,
Vol.9 No.4,
April
15,
2019
ABSTRACT: Purpose: The study undertakes to identify individual characteristics and their
investment pattern. The individual characteristics include MBTI personality
scores, risk taking behaviour, biases and investor demographics. Data and Methodology: A structured questionnaire
was administered on 117 respondents in India. The questions were related to
demographic variables, optimism bias, investment pattern and MBTI (Myers-Briggs Type Indicator®) personality assessment. The
results were analysed using chi-square and ANOVA. Findings: The results show that presence of optimism bias in investors is influenced by marital
status, nature of employment and work experience of investors. The Indian
investors are majorly balanced or conservative out of the total sample in
terms of risk taking behaviour. Risk taking attitude is affected by personality
of individuals. Investment in high risk instruments is different among males
and females, various age groups, marital status, and work place activity.
Investment in medium risk instruments significantly differ for work experience
on gender basis. Investment in low risk instruments does not differ for
demographic variables of investors as all investors invest equally in safe
investment mode. MBTI personality type is a less significant variable which
directly affects investment patterns of Indian investors. The study can be
useful for portfolio managers, investment advisors who can use it for designing
investment portfolios and products for their clients based on their demographic,
and behavioural profiling. Originality: This study identifies relationship between
investment pattern, behavioural biases and demographic characteristics of
Indian investors. MBTI personality assessment is one new dimension which is
less researched in studying investment behaviour in Indian context.