Title: Individual psychology and investment style

Authors: Lucy F. Ackert; George Athanassakos; Bryan K. Church

Addresses: Department of Economics and Finance Michael J. Coles College of Business, Kennesaw State University, 1000 Chastain Road, Kennesaw, GA 30144, USA ' Ben Graham Chair in Value Investing, Richard Ivey School of Business, University of Western Ontario, 1151 Richmond Street North, London, Ontario N5X 4P4, Canada ' Scheller College of Business, Georgia Tech., 800 West Peachtree Street, Atlanta, GA 30308-0520, USA

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.

Keywords: 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.

DOI: 10.1504/IJBAF.2015.072408

International Journal of Behavioural Accounting and Finance, 2015 Vol.5 No.2, pp.175 - 201

Received: 26 Dec 2014
Accepted: 12 Jul 2015
Published online: 12 Oct 2015 *

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