UPSI Digital Repository (UDRep)
|
UPSI Digital Repository (UDRep)
|
|
|
| ||||||||||||||||||||||
| Abstract : Universiti Pendidikan Sultan Idris |
| The purpose of this paper is to consider the role of overconfidence and personal experience in adoption of passive investment style. Literature review on overconfidence, experience and passive investing are provided, followed by discussion on prospect theory and naïve reinforcement theory. Proposed conceptual framework is provided to guide future research. Anecdotes and proxy of personal experience showed that investor's personal experience might lead to different investment behavior. Overconfidence might interact with personal experience in investing context. Proposition on whether an increasing passive investing trend is a result of lower overconfidence is made. Investor’s behavior on passive investing trend requires attention. The interaction between overconfidence and personal experience in light of prospect theory and naïve reinforcement theory provides insight on adoption of active / passive investing style. This paper addresses whether overconfidence is diminished in light of global passive investing trend. This paper also stresses the importance of personal experience in investment decision. |
| References |
Allen, W.D., & Evans, D.A. (2005). Bidding and overconfidence in experimental financial markets. The journal of behavioral finance, 6(3), 108-120. Andersen, S., Hanspal, T., & Nielsen, K.M. (2019). Once bitten, twice shy: The power of personal experiences in risk taking. Journal of Financial Economics, 132(3), 97-117. Barber, B.M., & Odean, T. (2001). Boys will be boys: Gender, overconfidence, and common stock investment. The quarterly journal of economics, 116(1), 261-292. Durand, R. B., Fung, L., & Limkriangkrai, M. (2019). Myopic loss aversion, personality, and gender. Journal of Behavioral Finance, 20(3), 339-353. Durand, R., Newby, R., Tant, K., & Trepongkaruna, S. (2013). Overconfidence, overreaction and personality. Review Behavioral Finance, 5(2), 104-133. Durand, R.B., Newby, R., & Sanghani, J. (2008). An intimate portrait of the individual investor. The Journal of Behavioral Finance, 9(4), 193-208. Ehrmann, M., & Tzamourani, P. (2012). Memories of high inflation. European Journal of Political Economy, 28(2), 174-191. Eysenck, H.J. (2017). The structure of personality. In The Biological Basis of Personality. Routledge. Fung, L., & Durand, R.B. (2014). Personality traits. Investor behavior: The psychology of financial planning and investing, 99-115. Gambetti, E. & Giusberti, F. (2019). Personality, decision-making styles and investments. Journal of Behavioral and Experimental Economics, 80, 14-24. Gervais, S. & Odean, T. (2001). Learning to be overconfident. The Review of Financial Studies, 14(1), 1-27. Glode, V. (2011). Why mutual funds “underperform”. Journal of Financial Economics, 99(3), 546-559. Kahneman, D. (2011). Thinking, fast and slow (Kindle Edition). Macmillan. Klement, J. (2015). Investor Risk Profiling: An Overview. CFA Institute Research Foundation. Michailova, J., & Schmidt, U. (2016). Overconfidence and bubbles in experimental asset markets. Journal of Behavioral Finance, 17(3), 280-292 .Malmendier, U., & Nagel, S. (2011). Depression babies: do macroeconomic experiences affect risk taking?. The Quarterly Journal of Economics, 126(1), 373-416. McCrae, R.R. and Costa, P.T. (2003). Personality in adulthood: A five-factor theory perspective. Guilford Press. Nicholson, N., Soane, E., Fenton?O'Creevy, M. and Willman, P. (2005). Personality and domain?specific risk taking. Journal of Risk Research, 8(2), 157-176. Oehler, A., Wendt, S., Wedlich, F. and Horn, M. (2018). Investors' personality influences investment decisions: Experimental evidence on extraversion and neuroticism. Journal of Behavioral Finance, 19(1), 30-48. Pompian, M.M. (2011). Behavioral finance and wealth management: how to build investment strategies that account for investor biases (Vol. 667). John Wiley & Sons. Pan, C.H. and Statman, M. (2012). Questionnaires of risk tolerance, regret, overconfidence, and other investor propensities. Journal of Investment Consulting, 13(1), 54-63. Pompian, M.M. and Longo, J.M. (2004). A new paradigm for practical application of behavioral finance: creating investment programs based on personality type and gender to produce better investment outcomes. The Journal of Wealth Management, 7(2), 9-15. Schaefer, P.S., Williams, C.C., Goodie, A.S. and Campbell, W.K. (2004). Overconfidence and the big five. Journal of research in Personality, 38(5), 473-480. Schwed, F. (1940). Where are the Customers' Yachts?, Or, A Good Hard Look at Wall Street (p. 212). New York:Simon and Schuster. Shefrin, H. (2002). Beyond greed and fear: Understanding behavioral finance and the psychology of investing. Oxford University Press on Demand. Thaler, R.H. and Benartzi, S. (2004). Save more tomorrow™: Using behavioral economics to increase employee saving. Journal of political Economy, 112(1), 164-S187. Zehndorfer, E. (2018). The Physiology of Emotional and Irrational Investing: Causes and Solutions. Routledge
|
| This material may be protected under Copyright Act which governs the making of photocopies or reproductions of copyrighted materials. You may use the digitized material for private study, scholarship, or research. |