Strategic finance

Contents lists available at ScienceDirect

Journal of Behavioral and Experimental Economics

journal homepage: www.elsevier.com/locate/jbee

Personality, decision-making styles and investments Elisa Gambetti⁎, Fiorella Giusberti Department of Psychology, University of Bologna, Viale Berti Pichat 5, 40127 Bologna, Italy

A R T I C L E I N F O

Keywords: Personality traits Decision-making styles Investment decisions Financial behaviour

A B S T R A C T

Three hundred and sixty-two participants completed the Sixteen Personality Factor Questionnaire and the General Decision-Making Styles Inventory, together with a survey considering investment perceptions and de- cisions. The results showed that anxious people tended to save money and avoid investments, perceiving high risks and low control and returns, whereas individuals with high Extroversion, Independence and Self-Control were more likely to make investments. Finally, rational and avoidant decision-making styles mediated, re- spectively, the influence of Self-Control and Anxiety on the decision to invest. These findings extend the knowledge of the relationship between individual differences in personality and decisional styles and investment perceptions and decisions.

1. Introduction

Over the last 20 years there has been an increasing number of stu- dies about the influence that personality has on financial perceptions and decisions. For example, there is evidence of a relationship between specific personality characteristics, namely sensation-seeking, impul- siveness, Type A personality trait, and people's ability to manage their finances (Grinblatt and Keloharju, 2009; Lauriola et al., 2014). These personality characteristics, in combination with one or more socio- economic factors (being male, older, married, wealthy, well educated, financially savvy, and having high economic expectations), also predict financial risk tolerance. This is defined as the willingness to engage in behaviours whose outcome is uncertain but could be negative, such as tolerating declines in investment prices while waiting for them to in- crease in value (Grable and Joo, 2004; Robb and Woodyard, 2011; Pinjisakikool, 2017).

In the behavioral finance literature, there is conflicting data on the impact of personality traits on investment decisions: some research showed that investors’ personality is correlated to stock market in- vestments (Donnelly et al., 2012; Mayfield et al., 2008; Durand et al., 2008; Fenton O'Creevy et al., 2004), whereas other studies suggested that personality traits, in particular anxiety, do not have a significant impact on investments, despite their importance in real life situations of decision making under uncertainty (Hopfensitz and van Winden, 2008). As existing evidence is puzzling, the aim of the present study is to in- vestigate whether certain personality traits can be associated with specific investment perceptions and with the likelihood to invest. Fur- thermore, we would like to analyze whether these associations are

mediated by differences in people's decision-making habits, that is de- cision-making styles. In this sense, decision-making styles could also play an important role in the prediction of investments. However, to our knowledge only two studies have investigated this relationship (Jamal et al., 2014; Muhammad and Abdullah, 2009). Moreover, the mediation role of decision-making styles in the relationship between personality traits and investments does not seem to have been in- vestigated in previous literature. The present study could be of critical importance to improve understanding of economic decision-making in an increasingly global and highly competitive economy.

1.1. Review of literature

1.1.1. Personality traits The five-factor model of personality is currently one of the most

common dimensional approaches to personality: the two most widely used personality models measuring personality according to five higher-level dimensions are the 16 Personality Factors (16PF; Cattell et al., 1970) and the Big Five (Goldberg, 1990; Costa and McCrae, 1992).

The 16PF model was developed by Cattell and collaborators (1970) who identified five global factors, that are Extroversion, Anxiety, Tough-Mindedness, Independence and Self-Control, as well as sixteen primary traits, which combine to provide an in-depth understanding of an individual's personality (see Table 1). Specifically, the Extroversion (versus Introversion) global factor represents basic human motivations for moving toward, versus away from, social interaction. High levels of Anxiety (versus Low Anxiety) were typical of people who are often

https://doi.org/10.1016/j.socec.2019.03.002 Received 19 June 2018; Received in revised form 26 February 2019; Accepted 6 March 2019

⁎ Corresponding author. E-mail address: [email protected] (E. Gambetti).

Journal of Behavioral and Experimental Economics 80 (2019) 14–24

Available online 08 March 2019 2214-8043/ © 2019 Elsevier Inc. All rights reserved.

T

worried, tense, suspicious of others and reactive, sometimes in a self- defeating manner. Tough-Mindedness (versus Receptivity) describes different aspects of reticence, specifically to feelings and emotions, to abstract ideas and imagination, to new approaches and ideas, and to people. The Independence (versus Accommodation) global factor refers to assertiveness and the ability to influence others, determination, openness to change and suspiciousness. Finally, the Self-Control (versus Lack of Restraint) global factor was defined by inhibition of impulses and desires, rigidity of thought, practicality and lack of spontaneity. A similar set of five personality factors, namely the Big Five, has been proposed by Goldberg (1990) and Costa and McCrae (1992), becoming one of the most common taxonomies for the study of personality traits. These five personality dimensions are shown in Table 1. Extroversion refers to an enthusiastic attitude toward different situations and people; agreeableness is characterized by good-nature, cooperativeness and trust. Neuroticism is characterized by vulnerability, anxiety and un- certainty. Conscientiousness involves precision, orderliness, responsi- bility and perseverance. Openness to experience is typical of people who tend to pay attention to their own feelings and to respect the va- lues of others. Agreeableness is typical of individuals who cooperate with others because they have an optimistic view of human nature and get on well with others.

A range of studies have shown strong correlational and factor-ana- lytic alignment between the 16PF and the Big Five models (see Table 1). In particular, there are significant correlations between the two Ex- troversion factors, between Anxiety and neuroticism, between Self- Control and conscientiousness, between Receptivity (low Tough- Mindedness) and openness to experience, and between Independence and dis-agreeableness (Rossier et al., 2004).

However, there are also several differences between the two models. As regards the definitions of personality traits, the 16PF Extroversion principally focuses on warmth, which is the basic dimension of inter- personal relations, while in the Big Five model this specific character- istic is divided into different traits such as extroversion and agree- ableness. The Anxiety trait refers to the ability to manage tension and worry, whereas neuroticism refers to a wider range of negative emo- tions such as anxiety, moodiness, anger and irritability. Receptivity, that is low Tough-Mindedness, describes four different aspects of openness to the world (feelings, ideas, approaches and people), while openness to experience focuses more on the cognitive and intellectual facets. Self-Control includes the whole domain of human methods for self-control and self-restraint versus impulsivity, while conscientious- ness focuses on narrower contents such as perfectionism and perse- verance. Independence is organized around traits of dominance and assertiveness, while in the Big Five model the trait of dominance is split between extroversion and disagreeableness (Cattell and Schuerger, 2003). Other differences between the 16PF and Big Five models concern methodological issues, such as the method of devel- opment (“bottom-up” for the 16PF model, in which the primary trait definitions are based on a wide range of independent studies, and “top- down” for the Big Five model, in which the personality facets were decided by consensus among a small group of psychologists).

In the present study, the 16PF model (Cattell et al., 1970) was used to evaluate personality traits for various reasons. Firstly, it is a well-

validated model: most studies have found the 16PF to be among the top five most commonly used normal-range instruments in both research and practice (Cattell and Schuerger, 2003). Secondly, unlike the Re- vised NEO Personality Inventory (McCrae and Costa, 2004), the 16PF-5 questionnaire (Cattell et al., 1993) assesses response styles (social de- sirability, defensiveness, and acquiescence) and, thus, it is possible to identify individuals who responded in an unusual or compliant manner. Thirdly, the 16PF model offers specific primary traits that are more powerful in understanding and predicting the complexity of actual behaviour than the Big Five personality traits (Paunonen and Ashton, 2001; Roberts et al., 2005). Fourthly, these traits can be condensed into a small number of global personality factors similar to those of the Big Five (Costa and McCrae, 1992; Goldberg, 1990), allowing a comparison with the existing literature about behavioural finance.

1.1.2. Personality traits and investments There is evidence that the Big Five personality dimensions influence

financial preferences and decisions regarding investments. Specifically, Extroversion seems to play an important role in investment decisions, shaping financial preferences and, thereby, influencing investment performance and choices (Durand et al., 2008; Oehler et al., 2017). Mayfield et al. (2008) showed that extroverts are more inclined to engage in short-term investing. Moreover, highly conscientious in- dividuals without specific experience in economics, who have high self- control, are more able to manage their money compared to highly neurotic individuals (Donnelly et al., 2012; Webley and Nyhus, 2001). Research showed that successful professional traders, who have high levels of risk acceptance, tend to be emotionally stable and open to new experiences (Fenton O'Creevy et al., 2004). On the other hand, other authors have concluded, without studying large samples of traders, that the anxiety trait does not predict trading or investment decisions (Hopfensitz and van Winden, 2008). Finally, agreeableness is related to risk aversion (e.g., Dohmen et al., 2011) and is inversely associated with the likelihood of investing in shares (Brown and Taylor, 2014). Rizvi and Fatima (2015) showed that all the Big Five personality di- mensions had a significant impact on stock market investment. How- ever, no previous studies used the Big Five model, measured by Cattell's 16PF, to analyse the influence of personality on investment decisions.

Studies have shown that there are several external and internal factors that significantly impact investors’ decisions. The former include the situation framing and the quality of information (Steul, 2006; Seo et al., 2010), whereas the latter include risk propensity and financial knowledge (Robb and Woodyard, 2011; Riaz et al., 2012a). There are only a few studies regarding the impact of investment perceptions, such as the perception of stock trend predictability, namely how much a person believes the fluctuation in price of an investment to be pre- dictable (Gambetti and Giusberti, 2012), and the perception of risks and expected returns (Ali, 2011). Personality traits have a significant in- fluence on these investment perceptions that, in turn, were found to have direct effects on financial behaviour.

As regards the perception of the predictability of investments, the available literature suggests that neuroticism (high Anxiety in the 16PF model) reflects the tendency to be unsure, vulnerable, and unstable (Judge and Bono, 2001). In addition, trait anxiety is linked to perceived

Table 1 Big five and 16pf factors.

Big five factors (Costa and McCrae) 16PF global factors (Cattell) 16PF primary factors (Cattell)

Extroversion/introversion Extroversion/introversion Warmth (+), Liveliness (+), Social boldness (+), Privateness (−), Self-reliance (−) Neuroticism/emotional stability High anxiety/low anxiety Emotional stability (−), Vigilance (+), Apprehension (+), Tension (+) Conscientiousness/lack of direction Self-control/lack of restraint Liveliness (−), Rule-consciousness (+), Abstractedness (−), Perfectionism (+) Closedness to experience/openness Tough-mindedness/receptivity Warmth (−), Sensitivity (−), Abstractedness (−) Openness to change (−) Antagonism/agreeableness Independence/accomodation Dominance (+), Social boldness (+), Openness to change (+), Vigilance (+)

Note: In the brackets the positive (+) or negative (−) contribute of each 16PF primary scale to its 16PF global scale. Each of the 16 primary factors may contribute to more than one global factor.

E. Gambetti and F. Giusberti Journal of Behavioral and Experimental Economics 80 (2019) 14–24

15

high uncertainty and a low sense of personal control over situations (Bensi and Giusberti, 2007) and is negatively associated with stock trend predictability (Gambetti and Giusberti, 2012). Moreover, people with high levels of traditionalism (positively related with Tough- Mindedness and negatively with Independence) tend to have an ex- ternal locus of control in different fields (Mudrack, 2007). On the contrary, extroversion and conscientiousness (low Self-Control) are positively related to the perception of control, influencing investment intentions and trading behavior (Mayfield et al., 2008; Oehler et al., 2017).

As regards the perception of risks, research showed that anxious individuals are prone to perceive high risks and, consequently, to hold less risky assets in their financial portfolios or to avoid investment decisions altogether (Maner et al., 2007; van Winden et al., 2011; Gambetti and Giusberti, 2012; Oehler et al., 2017). Conversely, other studies found that neuroticism is not related to risk appraisal and risk- taking in different domains, whereas sociability (high Extroversion and low Tough-Mindedness) is negatively related (Zuckerman and Kuhlman, 2000). As stated above, research found that emotional sta- bility (low Anxiety) and openness to new experiences (low Tough- Mindedness and high Independence) are correlated to high levels of risk acceptance in the financial field (Fenton O'Creevy et al., 2004). More- over, low self-control reduces the likelihood of risks attributing less weight to the consequences of negative outcomes in formulating overall threat perceptions in wide-ranging domains (Jia et al., 2015).

Up to this point, the discussion has emphasized the associations be- tween personality traits and investment perceptions and decisions. It is important to address the possible impact of decision-making styles as well.

1.1.3. Decision-making styles Decision-making styles are habitual response patterns shown by

individuals when confronted with a specific decision situation (Thunholm, 2004). Previous research has identified various categories of decision-making styles (e.g., Leykin and DeRubeis, 2010), con- sidering decision-making ability as an integral part of the different personality dimensions (McCrae and Costa, 2004). The most widely used and well-validated categories include the five decision-making styles proposed by Scott and Bruce (1995): rational, intuitive, sponta- neous, dependent and avoidant. Riaz et al. (2012b) showed that each of the Big Five personality traits of Costa and McCrae (1992) could be mapped onto a specific behavioural pattern of decision-making. Spe- cifically, conscientious individuals tend to adopt a rational decision- making style, following a process of decision-making that involves several stages, during which they analytically determine possible re- lationships between the elements under examination and, therefore, possible alternatives for the resolution (Rahman, 2014). The openness to experience trait is positively associated with the intuitive decision- making style (Riaz et al., 2012b). The spontaneous style, characterized by a feeling of immediacy and a need to conclude the decision-making process as quickly as possible, is positively associated with extroversion (Riaz et al., 2012b).

Agreeableness, which is characterized by trust, altruism, com- pliance, modesty, and sympathy, is positively associated with depen- dent decision-making style, which is in turn characterized by excessive reliance, consultations and dependence in decisional scenarios (Riaz et al., 2012b). The authors also found that neuroticism, char- acterized by anxiety, self-consciousness, depression, impulsiveness, anger, and vulnerability, is positively related to the avoidant decision- making style, principally defined by procrastination in making deci- sions. Although the Big Five personality traits explain from 15% to 28% of variance in the five decision-making styles (Riaz et al., 2012b), it should be noted that personality refers to the individual global patterns of thoughts, feelings and behaviours, whereas decision-making styles assess a more narrow construct, limited to the preferred way of ap- proaching decisions. Both these constructs remain fairly consistent and permanent throughout life and, for this reason, they could be

considered distinct stable inputs when making financial decisions (e.g., Thunholm, 2004). However, to our knowledge, there are a limited number of studies that have directly investigated the relationship be- tween decision-making styles and investment decision-making. Re- search showed that rational investors, who are able to analyse the en- vironmental, financial and economic information and who are not easily swayed by emotions, are more likely to have investment success compared to investors who do not have any specific strategy to search for information and are often influenced by emotions and frame (Muhammad and Abdullah, 2009; Jamal et al., 2014). Similar findings were also found by Grable and Joo (2004) showing that high self-es- teem and the tendency to search for information about financial pro- ducts systematically (rational style) help to predict financial risk-tol- erance and, consequently, to make a good stock selection. In general, the studies on individual differences in investment decisions identified two recurrent patterns of behaviour. Firstly, a “rational” style, defined as the tendency to analyse all available financial, economic and en- vironmental information before making the decision to invest; and secondly an “irrational” style, characterized by making shortcuts rather than carrying out fundamental analysis, and relying on emotions, in- vestment advice from strangers, speculations and rumours (Grable and Joo, 2004; Muhammad and Abdullah, 2009; Jamal et al., 2014). These are both general cognitive styles (rational versus irrational; see Pacini and Epstein, 1999), rather than specific decision-making styles. The latter are sub-components of wide cognitive styles (Kozhevnikov, 2007) and may provide a more accurate description of individual investment decision-making habits.

1.2. Research hypotheses

The overall purpose of the present study was to understand whether, and if so how, personality traits and decision-making styles are asso- ciated with investment perceptions and decisions.

The first aim of this study was to address this issue by examining whether investment decision-making is (or is not) predicted by per- sonality traits measured using the 16PF model. In the light of the alignments of the Big Five and 16PF traits (Rossier et al., 2004) and of the correlations between the Big Five personality traits and investment decisions and behaviours discussed above, the first hypothesis was proposed. In particular, we considered that: a) emotional stability and openness to experiences are typical characteristics of professional tra- ders (Fenton O'Creevy et al., 2004), b) extroversion predicts the ten- dency to invest in short-term stocks (Mayfield et al., 2008), c) agree- ableness is inversely associated with the likelihood to invest (Brown and Taylor, 2014), d) conscientiousness predicts the ability to manage money (Donnelly et al., 2012). Hypothesis 1 . Anxiety and Tough-Mindedness (negatively), Extroversion, Independence and Self-Control (positively), will predict the decision to invest.

Moreover, we also expected that personality traits would predict the perceived stock trend predictability, which measures the perception of being able to forecast financial trends. The literature review suggested that trait anxiety but also high levels of traditionalism are associated with external locus of control in different fields (Gambetti and Giusberti, 2012; Mudrack, 2007), whereas extroversion and con- scientiousness are positively related to the perception of control over situations (Oehler et al., 2017; Mayfield et al., 2008). On this basis, the following second hypothesis was proposed: Hypothesis 2 . Anxiety and Tough-Mindedness will be negatively related to the perception of stock trend predictability, whereas Extroversion, Independence and Self-Control will be positively correlated with this perception.

We were also interested in risk and return perceptions about in- vestments. As stated above, the literature review showed that trait anxiety is positively related with perceived risks about investments,

E. Gambetti and F. Giusberti Journal of Behavioral and Experimental Economics 80 (2019) 14–24

16

whereas sociability is negatively related (Gambetti and Giusberti, 2012; Zuckerman and Kuhlman, 2000). Openness to new experiences is cor- related to high-risk acceptance in the financial field (Fenton O'Creevy et al., 2004) and low self-control reduces the likelihood of risk per- ceptions in wide-ranging domains (Jia et al., 2015). Given these results and considering the paucity of literature examining the relationship between risk and returns perceptions about investments and personality traits, we proposed the following hypothesis: Hypothesis 3 . Anxiety, Tough-Mindedness and Self-Control will predict perceptions of high risks and low returns, vice-versa for Extroversion and Independence.

Previous research has investigated the usefulness of decision- making styles, together with individual characteristics linked to dif- ferences in making decisions, to predict various performance criteria. The former include quality, competence, and satisfaction about deci- sions in several domains (e.g., Crossley and Highhouse, 2005; Dewberry et al., 2013; Wood and Highhouse, 2014). The latter comprise locus of control, sensation-seeking, self-esteem and self-regulation (Thunholm, 2004; Baiocco et al., 2009). However, only a few studies have in- vestigated the relationship between investments and individual deci- sion-making habits. These studies considered general cognitive styles (rational versus irrational) rather than specific decision-making styles (Jamal et al., 2014; Muhammad and Abdullah, 2009; Grable and Joo, 2004). Based on the results of these previous studies, we proposed: Hypothesis 4 . Rational, intuitive and spontaneous decision-making styles will be positively related to the decision to invest, while avoidant and dependent decision-making styles will negatively predict the decision to invest.

As stated above, the original Big Five personality factors are a fairly comprehensive measure of personality in general (Goldberg, 1990) and they have been associated with decision-making styles (Pacini and Epstein, 1999; Riaz et al., 2012b). However, no known study to date has investigated the interactive effect between personality traits and deci- sion-making styles on investment decisions. Therefore, another aim of this study was to rule out the possibility that decision-making styles might mediate the relationship between personality traits and invest- ment decisions. Thus, we proposed: Hypothesis 5 . Decision making-styles will mediate the relationship between personality traits and the decision to invest, as shown in Fig. 1.

2. Method

2.1. Sample

In 2016 a total of 450 surveys, created ad hoc for the current study,

were delivered by hand, mail or email to adults (from 30 to 70 years old) with different occupations: office workers, bankers, entrepreneurs, manual workers, artisans and so on. About 50% of the sample were recruited from bank or insurance company employees. All participants provided informed consent prior to the study and their participation was voluntary. The study was approved by the Ethics Committee of the local University.

We obtained 373 successful responses in the same year. We ex- cluded 11 participants with an unusual response pattern on the 16PF-5 Questionnaire that would have affected the validity of scores and could have contributed towards bias in the findings. The final sample (N=362) had a mean age of 48.32 years (SD=11.25), and were 37.4% males. The educational level of the sample was the following: 10.6% of participants had a primary school certificate, 49% had grad- uated from high school, and 40.4% had a bachelor's or graduate degree. 18.3% of participants had an income of less than 10,000 Euros per year, 29.8% from 10,000 to 20,000 Euros, 37.5% from 21,000 to 40,000 Euros, 12.5% more than 40,000 Euros, 1.9% did not respond to the question about household income.

Participants were also asked to rate on a 3-point rating scale their experience in economic/financial topics. 32.8% of the sample was in- experienced, 9.9% had no specific training but in the past had learned something from personal experience, and 57.3% had studied financial topics or worked in the field of economics.

2.2. Materials and procedure

Participants first completed demographics (gender, age, years in school, household income, experience in economic/financial topics). Thereafter they filled in questionnaires assessing personality traits and decision-making styles in a counterbalanced manner with respect to the investment questionnaire: in 225 surveys the personality traits ques- tions and the decision making questions come before the investment questions and in the other 225 surveys the investment questions came before the personality and the decision making questions. This coun- terbalancing presentation of questionnaires can reduce or eliminate the possible order effect that could affect the responses (see Hogarth and Einhorn, 1992). For example, if people answer the investment questions first, they may have different reactions to the following personality (for example being more worried) and decision-making styles (for example more or less rational) questionnaires. On the other hand, if people an- swer the personality and decision-making styles questions first, they may have biases on the investment perceptions (for example more or less sensitive to risks and/or returns on the basis of the previous re- sponses).

The independent variables about personality traits and decision- making styles were measured using the 16 Personality Factor-fifth

Fig. 1. Schematic representation of the mediation effects of decision making styles in the relationship between personality traits and the decision to invest.

E. Gambetti and F. Giusberti Journal of Behavioral and Experimental Economics 80 (2019) 14–24

17

edition (16PF-5; Russell and Karol, 2001) and the General Decision Making Styles (Gambetti et al., 2008).

The 16PF-5 is a 170-item questionnaire, made up of the sixteen primary traits, some of which contributed to more than one of the five bipolar global factors (see Table 1). Here are some examples of items for each global factor. Extroversion: “I would love to organize and see people in a commercial office rather than being an architect and drawing projects in a quiet room”. Anxiety: “When I'm tense I feel ir- ritable”. Tough-Mindedness : “I find it easy to produce new ideas”. Independence: “When people do something that irritates me I usually do point it out”. Self-Control : “I believe that all work must be done in the best way”. In the present sample the Cronbach’α ranged from .75 to .90 across the sixteen primary scales. In the current study, both the five global factors and the 16 primary factors were used as independent variables.

The General Decision Making Styles (GDMS) is a self-administered questionnaire composed of 25 items and structured by five different scales (Scott and Bruce, 1995). Firstly, Rational, characterized by a logical and structured approach to decision-making (for example “I double-check my information sources to be sure I have the right facts before making a decision”). Secondly, Intuitive, represented by a ten- dency to rely upon intuitions, feelings and sensations (for example “When making a decision, I rely upon my instincts”). Thirdly, Depen- dent, characterized by need of the assistance and support of others (for example “I often need the assistance of other people when making important decisions”). Fourthly, Avoidant, represented by attempts to postpone and avoid decisions (for example “I avoid making important decisions until the pressure is on”). Fifthly, Spontaneous, characterized by the tendency to make decisions in an impulsive way (for example “I generally make snap decisions”). The 25 items were presented to re- sponders in a five-step Likert scale ranging from strongly disagree (1) to strongly agree (5). In the sample of this work Cronbach’α ranged from .71 to .85 across the five scales.

Investment decisions and perceptions are the dependent variables and were measured using the investment questionnaire adapted by Gambetti and Giusberti (2012), which comprises five questions. Two were about investment decisions: question A (“Have you ever invested your money?”) had a dichotomous answer and investigated the decision to invest, whereas question B (“What kind of investment products have you chosen so far?”) is open and asks about the specific choice of in- vestment. Participants answered this question by naming different kinds of investments: bank deposits, shares, mutual funds, state and industrial bonds, and insurance products. To simplify the subsequent

analyses, the answers to question B were turned into a dichotomous variable following the definition provided by Blades and Sturm (2016). “Savers” (26% of the whole) hold investment products that pay low, fixed rates of interest or dividends such as bank deposits and/or in- surance products. “Investors” (28%) invest money in products that pay medium/high and variable rates of interest or dividends such as shares (8.5%), mutual funds (8.6%), state and industrial bonds (9.2%). Only 1.7% of the sample did not respond.

Investment perceptions were measured by the other three questions in the questionnaire. Participants were asked to rate the return pre- dictability (question C: “How predictable do you believe the trend of the investment to be?”) of each kind of investment listed in question B (or, if they had never invested, investments proposed by researchers concerning shares, mutual funds, state bonds, industrial bonds, in- surance products, and bank deposits), on a 10-point scale. They were also asked about their perception of risks (question D: “What is the degree of risk, that is the possibility of losing money, you perceive?”) and their perception of returns (question E: “What is the degree of profit, that is the possibility of earning money, you expect?”).

2.3. Preliminary analyses

The sample was quite evenly distributed with 46% that had never invested money, and 54% that had decided to invest. This result is in line with the CONSOB annual report (2016), showing that 50% of Ita- lians have at least one financial product. Because people who actually invested (answered “yes” to question A) could have different answers about investment perceptions (C, D, E questions) to those who did not invest, we performed a multivariate ANOVA considering as an in- dependent variable the responses to question A and as dependent variables the average scores regarding predictability, risk and returns perceptions about investments. The results did not show any significant effect [stock trend predictability: F(1361) = 1.76, P = .18; risk: F (1361) = 0.18, P = .67], except for perceptions about returns [F (1361) = 6.05, P = .019]. Specifically, people who actually invested perceived a higher possibility of earning money from their investments (M=47.96, SD = 14.86) than people who did not invest (M=40.26, SD = 20.66). For this reason, the subsequent analyses about returns perceptions considered only respondents who actually have invest- ments (N=194).

Table 2 shows descriptives and intercorrelations, controlling for demographics and financial experience, between the principal measures of the study.

Table 2 Means, standard deviations and partial correlations, controlling for demographics and financial experience, of all the principal measures.

Mean (SD) Inter-correlations

1 2 3 4 5 6 7 8 9 10 11 12 13 14

1. Decision to invest (A) 0.72 (0.45) – 2. Savers/Investors (B) 1.68 (0.46) .24⁎⁎ – 3. Predictability (C) 4.62 (2.17) .23⁎⁎ .17* – 4. Risks (D) 4.77 (1.84) .01 −.03 −.29⁎⁎ – 5. Returns (E) 4.17 (1.99) .12 .07 .34⁎⁎ .05 – 6. Extroversion 4.16 (2.04) .14* .04 .09 −.21* .06 – 7. Anxiety 5.46 (1.98) −.15* −.15* −.15* .13* −.14* −.19* – 8. Tough-mindedness 6.19 (1.95) −.02 .01 .16* .14* −.12 −.26⁎⁎ −.06 – 9. Independence 4.97 (1.82) .07 .15* .05 .17* .19* .20⁎⁎ .14* −.45⁎⁎ – 10. Self-Control 6.33 (1.80) .20⁎⁎ .16* .15* −.06 −.07 −.19* −.04 .40⁎⁎ −.25⁎⁎ – 11. Rational 19.18 (2.68) .15* .16* −.01 .06 −.01 −.07 .05 .25⁎⁎ .04 .35⁎⁎ – 12. Intuitive 17.23 (2.99) .05 .08 .06 .03 −.09 .11 −.04 −.15* .01 −.11 −.22⁎⁎ – 13. Dependent 17.21 (3.94) .20⁎⁎ .15* −.11 .02 −.06 .20⁎⁎ .08 .15* −.17* .07 .25⁎⁎ −.02 – 14. Avoidant 13.27 (3.97) −.15* −.13* −.27⁎⁎ −.01 −.04 −.13* .27⁎⁎ .07 −.23⁎⁎ −.15* −.03 .06 .42⁎⁎ – 15. Spontaneous 12.78 (3.50) .04 −.01 .03 −.14* .01 .13* .11 −.05 .05 −.29⁎⁎ −.49⁎⁎ .35⁎⁎ −.24⁎⁎ .10

Notes: ⁎ P < .05. ⁎⁎ P < .01.

E. Gambetti and F. Giusberti Journal of Behavioral and Experimental Economics 80 (2019) 14–24

18

2.4. Data analyses

In order to evaluate whether personality predicts investment decisions (see Hypothesis 1) and investment perceptions (see Hypothesis 2 for the perception of stock trend predictability, and Hypothesis 3 for the per- ception of risks and returns), hierarchical multiple regression analyses were performed. These analyses evaluated the contributor of predictors above and beyond previously entered predictors, controlling for their statistical effects and examining the incremental validity. In step 1 de- mographics, that is age, gender, years in school, household income, and experience in economic/financial topics, were considered. For all analyses using gender as a variable, we coded females as -1 and males as 1. In step 2 the five 16PF-5 global factors, that is Extroversion, Anxiety, Tough- Mindedness, Independence and Self-Control, were considered as in- dependent variables on investment decisions (scores on question A of the investment questionnaire and on the dichotomous variable from question B), on perceived stock trend predictability (the average score of questions C), on risk perception (the average score of questions D), and on percep- tion of returns (the average score of questions E, filtered by question A).

To further examine the association between personality traits and investment decisions and perceptions, we also performed, for the de- pendent variables considered in the present study, separate hierarchical OLS regression analyses about each 16PF-5 personality global factor that was significant in the previous regression analysis. We considered as independent variables the 16PF-5 primary scales that contributed to make up each global factor, controlling for demographics and financial experience in step 1. The results are shown in the Appendix.

In order to evaluate whether decision-making styles predict in- vestment decisions (see Hypothesis 4), hierarchical regression analysis was performed considering as independent variables the five scores of GDMS, that is Rational, Intuitive, Dependent, Avoidant and Sponta- neous styles, controlling for demographics and financial experience in step 1, on investment decisions.

Finally, in order to test Hypothesis 5, path analyses were performed to assess whether there were indirect effects of 16PF-5 global factors, through decision-making styles, on investment decisions.

Multicollinearity diagnostics suggested adequate independence of all predictors (all tolerance levels < .80; see Tabachnick and Fidell, 2007).

3. Results

3.1. Personality and investment decisions

Supporting Hypothesis 1, the logistic regressions analysis on

question A scores showed that Anxiety was negatively associated with the decision to invest, whereas Extroversion and Self-Control were positively associated, controlling for demographics and experience in the financial field. The analysis failed to find a significant relation be- tween Tough-Mindedness, Independence and owning investments. The regression coefficients are shown in Table 3.

The logistic regression analyses on the dichotomous variable from answers on question B, controlling for gender and financial experience, showed that Anxiety was associated with the decision to save money (see Table 3). As shown in Table 3, Independence and Self-Control were associated with the decision to invest. Tough-Mindedness and Ex- troversion global factors remained the 16PF-5 personality factors that did not predict investment decisions in the present sample.

3.2. Personality and investment perceptions

The results of the regression analyses of investment perceptions on the five personality global factors are shown in Table 4. Firstly, they reveal that the perceived stock trend predictability was negatively predicted by Anxiety, and positively by Tough-Mindedness and Self- Control. Secondly, the perception of risks was positively predicted by Anxiety, Independence and Tough-Mindedness, and negatively by Ex- troversion. Thirdly, the perception of returns was negatively predicted by Anxiety and positively by Independence.

3.3. Decision-making styles and investment decisions

Table 5 displays coefficents obtained from regressing scores from questions about investment decisions on decision-making styles, con- trolling for demographics and financial experience. Supporting Hypothesis 4, rational decision-making style was positively associated with the decision to invest in different kinds of stocks, while avoidant style was negatively associated with this financial decision predicting the decision to save money. Contrary to the hypothesis, dependent style positively predicted the decision to invest. The analyses failed to find a significant relation between intuitive and spontaneous styles and in- vestment decisions.

Since, from previous analyses, significant relationships between the Independence trait and investments were not found (in this hypothe- tical relationship the dependent decision-making style could have a mediation role), such as between intuitive and spontaneous styles (which could mediate Tough-Mindedness and Extroversion) and in- vestment decisions, only two mediations among those hypothesized were tested (see Fig. 1 and Hypothesis 5). Therefore, in order to assess if rational and avoidant decision-making styles mediate, respectively, the

Table 3 Logistic regressions of the decision to invest and the kind of investment on 16PF-5 global factors (Step 2) controlling for demographics and financial experience (Step 1).

Investment decision (N=362) Savers vs. investors (N=258)

Step 1 Step 2 Step 1 Step 2

Parameter B (S.E.) Wald P B (S.E.) Wald P B (S.E.) Wald P B (S.E.) Wald P

Age .03 (.02) 4.41 .036 .04 (.02) 5.21 .022 .001 (.01) .001 .974 .001 (.01) .006 .937 Gender .44 (.19) 5.58 .018 .71 (.22) 10.49 .001 .52 (.17) 8.73 .003 .61 (.19) 10.33 .001 Education −.57 (.28) 4.80 .043 −.60 (.30) 4.04 .044 .07 (.26) .09 .767 −.07 (.26) .08 .773 Income .41 (.15) 7.77 .005 .43 (.16) 7.14 .008 .20 (.13) 2.26 .133 .19 (.14) 1.87 .171 Experience .15 (.11) 1.88 .170 .20 (.12) 2.41 .120 −.02 (1.26) .03 .870 −.03 (.11) .09 .764 Extroversion .22 (.09) 5.82 .016 .08 (.10) 1.21 .270 Anxiety −.23 (.09) 5.10 .015 −.46 (.07) 8.71 .003 Tough-mindedness .02 (.10) .02 .871 .05 (.09) .30 .583 Independence .05 (.10) .27 .604 .22 (.09) 4.66 .048 Self-control .53 (.11) 21.61 .001 .29 (.09) 4.11 .046 R2 .22; χ2= 41.74 .001 .36; χ2= 31.55 .012 .11; χ2= 20.16 .001 .13; χ2= 30.12 .010

Notes: Logistic regressions of investment decision (question A) and savers/investors (question B). The dependent variables are dichotomous: question A (0=no, 1= yes), question B (1= saver, 2= investor). S.E.= Standard Error.

E. Gambetti and F. Giusberti Journal of Behavioral and Experimental Economics 80 (2019) 14–24

19

influence of Self-Control and Anxiety on the decision to invest two path analyses, one for each personality trait, were conducted. Personality traits were considered exogenous variables and decision-making styles endogenous variables. Good models fitting the data were found: the model about Self-Control (see Fig. 2) did not differ significantly from a fully saturated model [χ2(6)= 2.82, P= .22], such as the model about Anxiety (see Fig. 3) [χ2(6)= 2.59, P= .21]. The standardized regres- sion weights for the indirect effects on investment decisions were .23 for Self-Control through rational style, and −.19 for Anxiety through avoidant style.

4. Conclusions

This study gives a contribution to a better understanding of the relationships between personality, decision-making styles and invest- ment decision-making. First of all, regarding the control variables gender, income and experience (only for perceived stock trend pre- dictability) were the factors that regularly predict perceptions and de- cisions about investments. These results are in line with both the studies suggesting that men are prone to take more risk investments than women (e.g., Dwyer et al., 2002); and research showing that

Table 4 OLS regressions: personality traits and investment perceptions.

Predictability (N=362) Risks (N=362) Returns (N=194)

Step 1 Step 2 Step 1 Step 2 Step 1 Step 2

Parameter β t P β t P β t P β t P β t P β t P

Age −.06 −.87 .250 −.07 .98 .325 .07 0.96 .360 .08 1.18 .239 −.14 −1.97 .046 −.13 −1.79 .074 Gender .16 2.25 .037 .21 2.91 .004 −.36 −5.11 .001 −.32 -4.46 .001 .06 .84 .426 .08 1.14 .255 Education .24 3.36 .001 .22 3.08 .002 −.10 −1.45 .171 −.13 -1.85 .065 .18 2.39 .030 .16 2.15 .033 Income −0.06 −0.74 .485 −0.08 −1.01 .310 .23 2.95 .004 .17 2.23 .027 .06 0.45 .449 .06 .32 .747 Experience .24 3.83 .001 .22 4.10 .001 .05 −.74 .442 −04 −.74 .460 .05 0.40 .412 .08 .79 .425 Extroversion .11 1.61 .112 −.14 −1.99 .015 .03 0.38 .712 Anxiety −.16 −2.56 .005 .14 1.83 .027 −.14 −1.99 .047 Tough-mindedness −.23 −3.01 .002 .15 1.93 .014 −.03 −0.35 .790 Independence −.08 −1.13 .297 .16 1.83 .027 .14 1.99 .045 Self-control .16 2.29 .039 −.03 −.48 .541 −.01 −.10 .848 Adjusted R2 .12 .001 .05 .001 .13 .001 .06 .001 .05 .004 .08 .003

Notes: OLS regressions of perceived stock trend predictability (question C), perceived risks (question D), and perceived returns (question E) on demographic variables and personality traits. The dependent variables ranged from 0 (absolutely no) to 10 (absolutely yes).

Table 5 Logistic regressions of the decision to invest and the kind of investment on decision-making styles (step 2) controlling for demographics (step 1).

Investment decision (N=362) Savers vs. investors (N=194)

Step 2 Step 2 Parameter B (S.E.) Wald P B (S.E.) Wald P

Age .06 (.02) 8.58 .027 .01 (.02) .56 .981 Gender .55 (.21) 6.65 .030 .55 (.19) 8.27 .003 Education −.57 (.31) 3.51 .149 −.04 (.26) .02 .801 Income .34 (.16) 4.57 .007 .17 (.14) 1.40 .158 Experience .29 (.13) 5.05 .037 .01 (.11) .01 .892 Rational .20 (07) 9.33 .010 .16 (.06) 7.89 .003 Intuitive .06 (.05) .86 .222 .04 (.06) .49 .569 Dependent .19 (.05) 10.99 .001 .11 (.05) 4.70 .042 Avoidant −.17 (.05) 8.94 .002 −.10 (.05) 4.51 .039 Spontaneous .09 (.06) 2.73 .794 .02 (.06) .14 .783 R2 .36; χ2= 30.92 .0001 .16; χ2= 20.16 .002

Note: The regression coefficents of Step 1 for both analyses are shown in Table 3.

Fig. 2. Mediation model about self-control.

E. Gambetti and F. Giusberti Journal of Behavioral and Experimental Economics 80 (2019) 14–24

20

respondents with more investment experience had more risk-tolerant responses and higher-risk portfolios than less experienced investors (Chen and Corter, 2005; Gambetti and Giusberti, 2012).

Hypothesis 1 was confirmed showing that, controlling for demo- graphics and financial experience, personality traits, except for Tough- Mindedness, predict decision-making about investments. Specifically, the present findings show that anxious individuals, characterized by high levels of apprehension, tension and vigilance, are prone not to invest or to save money. This result is in accordance with previous studies suggesting that neuroticism, which is associated with tenseness, moodiness, insecurity and anxiety, is related to avoidant risk-taking (Lauriola et al., 2014; Paunonen and Ashton, 2001). It is also in line with recent studies showing that anxious individuals prefer interest- bearing accounts rather than investments (van Winden et al., 2011) and low risky asset classes and portfolios (Oehler et al., 2017; Gambetti and Giusberti, 2012). The 16PF model, used in this study, allows differ- entiation between anxiety and impulsivity personality dimensions, which are included as facets of the broader trait of neuroticism in the Big Five model (Costa and McCrae, 1992), shedding more light on predictions about investment decision-making.

Moreover, the present study shows that people with high self-con- trol and self-discipline (low impulsivity) and who are practical and solution oriented are prone to invest their money in different kinds of stocks, industrials and state bonds, confirming that self-control me- chanisms are positively related to spending on investments and dur- ables (Dewberry et al., 2013).

Two other dimensions of personality to be considered are ex- troversion and independence, both positively correlated with the de- cision to invest in stocks, which is commonly perceived as risky in the investment literature (Lorenz and Truck, 2008; Goodman, 2003). The present data shows that a specific aspect of extroversion, which is li- veliness, predicts investment decisions. These findings confirm that extroverted individuals, who are optimistic and outgoing, are likely to make financially risky decisions and take the initiative to begin in- vesting (Oehler et al., 2017; Mayfield et al., 2008), although sometimes they can fail when using background knowledge, showing a lack of ability in making financial decisions (Dewberry et al., 2013).

Finally, people who score high in independence of mind, asser- tiveness and ability to influence others, are more likely to invest than people who are vigilant, suspicious and skeptical. This result is in ac- cordance with research on Ultimatum Game, showing that independent and self-determining people demand higher return shares (Brandstätter and Königstein, 2001). Moreover, given the relationship between Independence and dis-agreeableness (Rossier et al., 2004), this finding is also in line with studies which provide evidence that dis- agreeableness correlates with willingness to assume risk (Kowert and Hermann, 1997).

Hypothesis 2 was partially confirmed: Anxiety and Tough-Mind- edness are negatively related to the perception of stock trend predict- ability, whereas people sympathetic to others, flexible, and open to

change (who score low on Tough-Mindedness) have the perception to forecast the variation in stock trends. This result is in line with previous studies suggesting that negative emotional states, such as worry and anxiety, induce people to lack confidence in their ability to evaluate investment options (Gambetti and Giusberti, 2012; van Winden et al., 2011; Judge and Bono, 2001), whereas openness, which is related to descriptors such as wide and unconventional interests (Costa and McCrae, 1992), correlates with long-term investment choices (Mayfield et al., 2008).

As regards Self-Control, people with practical and solution oriented thinking are more likely to perceive high control over the variation in stock trends. This finding is consistent with other research suggesting a positive correlation between the Big Five factor conscientiousness, which is aligned with 16PF-5 Self-Control global factor (Cattell and Schuerger, 2003), and the perception of control about investments (Mayfield et al., 2008).

Hypothesis 3 was partially confirmed: impatient, suspicious and withdrawn individuals (high Anxiety), but also introverted, timid, in- hibited, unsociable and traditionalist people (high Tough-Mindedness, low Extroversion and low Independence) perceive high risks about in- vestment decisions. This data confirms investment literature showing that anxious individuals are prone to perceive high levels of uncertainty and risks (Gambetti and Giusberti, 2012; van Winden, Krawczyk, and Hopfensitz, 2011; Maner et al., 2007), whereas sociability and openness to new experiences are correlated to high levels of risk acceptance in the financial field (Zuckerman and Kuhlman, 2000; Fenton O'Creevy et al., 2004). In turn, self-assessed risk predicts investment behaviour (e.g., Bailey and Kinerson, 2005). It is well established in the literature that people do not assess investment risk objectively, considering the variance of stock utility, when deciding on which solution to invest in (Parker and Fischhoff, 2005). On the contrary, the perception of the risks in the financial field is predicted by different factors, such as de- mographic variables and individual dispositions (e.g., Olsen and Cox, 2001). This study also shows that the perception of expected re- turns differs from person to person: placid and relaxed individuals, not easily upset or aroused, but also competitive, who think strategically, and showing low tendencies to guilt or self-doubt (low Anxiety and high Independence) tend to perceive greater returns associated with shares, industrials and state bonds.

It is worthy of note that the Self-Control global factor only predicts stock trend predictability, but it is not significantly correlated with risk and return perceptions about investments. This finding offhand seems inconsistent with research that found an influence of impulsivity (low Self-Control) on the underestimation of the risks in different situations (Jia et al., 2015). However, impulsivity is a complex concept, which is measured by different personality traits: lack of self-discipline (low Self- control or conscientiousness), and lack of ability to defer urges and impulses (high Anxiety or neuroticism) (Costa and McCrae, 1992). Therefore, since trait anxiety affects the perception of investment risks and returns, as mentioned above, the present results still confirm the

Fig. 3. Mediation model about anxiety.

E. Gambetti and F. Giusberti Journal of Behavioral and Experimental Economics 80 (2019) 14–24

21

importance of impulsivity on these assessments. Future research is needed concerning the prediction and explanation of impulsivity on investment perceptions and decisions.

Hypothesis 4 was only confirmed for rational and avoidant deci- sion-making styles. Specifically, this study shows that people with a rational style are prone to invest money, probably considering and analyzing different available financial, economic and environmental information before deciding to invest in any instruments of the capital market. Previous studies show that rational individuals make accurate decisions and obtain positive outcomes in several domains, such as academic achievement (Baiocco et al., 2009) and job satisfaction (Crossley and Highhouse, 2005), also becoming successful in their fi- nancial activities (Jamal et al., 2014). Moreover, in the present study people with dependent and avoidant decision-making styles seem to make opposite decisions about the management of their money. These two decision-making styles are both linked to a sense of lacking per- sonal certainty and self-efficacy (Lubna Rahman, 2014; Gambetti et al., 2008; Thunholm, 2004) and represent different ways of approaching financial situations: the first is characterized by searching for advice and guidance from others, leading them to invest their savings. The second style, principally defined by decision-making procrastination, leads people to avoid the decision to invest, resulting in negative out- comes (Wood and Highhouse, 2014).

Hypothesis 5 was partially confirmed: the results suggest that ra- tional and avoidant styles mediate the relationship between Self-Con- trol and Anxiety, respectively, and investment decisions. People with a high ability to control their own impulses tend to invest using the ra- tional style that allows them to consider carefully and thoroughly dif- ferent investment choices and to choose the most suitable for them (see also Dewberry et al., 2013). On the contrary, highly anxious individuals tend to worry when they have to make decisions and to use the avoi- dant style in order to reduce uncertainty and to protect themselves from potential risks and threats (Bensi and Giusberti, 2007; Maner et al., 2007). This study highlights that decision-making styles add an im- portant perspective to understanding how personality influences fi- nancial decision-making, and more specifically, investment decisions. This study expands previous research (Jamal et al., 2014; Muhammad and Abdullah, 2009; Grable and Joo, 2004) by considering traditional personality variables and decision-making styles simultaneously. Moreover it provides a strong argument for the importance and impact that habitual patterns and tendencies in the way a person approaches decisions and problems can have on investment decisions. However, future studies are needed to allow more insight into how personality and decision-making styles interact by influencing investment decision- making.

4.1. Implications

Despite the limitations of this study, such as the self-reported data and the results based only on correlations, these findings may be of considerable importance for the theoretical and practical implications. From a theoretical point of view, the results of this study could improve understanding of how individual differences influence investment per- ceptions and subsequent decisions, thus expanding knowledge about the relationship between personality traits or decision-making styles and specific decision-making patterns (Maner et al., 2007; Kozhevnikov, 2007).

At the application level, this research can be considered as a part of the growing field of behavioral finance, which had some success in explaining how certain groups of investors behave and, in particular, what kinds of portfolios they choose to hold (e.g., Campbell, 2006). Although some studies indicate that risk and behavioural assessments are not always able to predict financial behaviour (Ackert, 2014), this research shows that specific personality traits are associated to per- ceptions and decisions about investments. Thus, it could provide useful information for both investors, helping them to be more aware of their

own perceptions and decisions about investments and to select better investment options, as well as financial educators, counselors and planners, through the modulation of differentiated financial proposals, depending on the individual characteristics of their clients. From the financial planner's perspective, investor behavior often deviates from logic and reason, thus increasing the difficulty of comprehending cli- ents’ judgements (Ackert, 2014). This research suggests that financial operators could pay more attention to the personality traits and deci- sion-making styles of their clients by submitting short questionnaires in order to understand their perceptions and behavior more fully.

Appendix

As regards the question A, two primary scales of Anxiety, that is Apprehension (B = −0.57, SE = 0.28, Wald=4.08, P = .032) and Tension (B = −0.44, SE = 0.18, Wald=5.58, P = .039), negatively predicted the decision to invest (χ2 = 41.74, P = .001, R2 = .22); whereas two primary scales of Extroversion (χ2 = 48.63, P = .001, R2 = .25), namely Liveliness (B= .69, SE = .30, Wald=5.13, P = .025) and Forthrightness (B= .38, SE = .15, Wald=6.31, P = .041), and two primary scales of Self-Control (χ2 = 30.96, P = .001, R2 = .36), that are Perfectionism (B= .28, SE = .09, Wald=10.03, P = .001) and Practicality (B= .25, SE = .13, Wald=3.92, P = .013), positively predicted owning investments.

As regards the question B, the regression analyses on the Anxiety primary scales showed that only Vigilance (B= .21, SE = .08, Wald=7.36, P = .017) predicted the decision to save money (χ2 = 9.39, P = .041, R2 = 0.16).

As for the primary scale of Independence, trusting (B= .18, SE = .07, Wald=6.09, P = .014) and dominant (B= .27, SE = .14, Wald=3.59, P = .032) people are prone to invest money (χ2 = 9.95, P = .048, R2 = .16); while Perfectionism (B= .49, SE = .18, Wald=7.32, P = .012), a primary scale of Self-Control, predicted the decision to invest in different kinds of stocks (χ2 = 20.16, P = .012, R2 = .11).

As regards the stock trend predictability, the subsequent regression on Anxiety primary scales showed that Tension (β=−.20, P= .006), Vigilance (β = −.18, P = .007) and Reaction (β = −.23, P = .006) negatively predicted this perception [F(4360) = 4.89, P = .001, ad- justed R2 = .06]. The regressions on Tough-Mindedness [F (4360) = 3.00, P = .007, adjusted R2 = .03] and Self-Control [F (4360) = 2.33, P = .042, adjusted R2 = .02] primary scales showed that unsentimental (β = .13, P = .022), practical (Tough-Mindedness model: β= .17, P= .042; Self-Control model: β= .22, P= .017) and traditional people (β= .15, P= .030) are prone to perceive high stock trend predictability.

As for the perception of risks, the regression analysis on Anxiety primary scales showed that tense (β= .14, P= .027), vigilant (β= .17, P= .021) and reactive (β= .14, P= .027) people perceived high risks [F(4360) = 2.80, P = .008, adjusted R2 = .03]. The regressions on Independence [F(4360) = 5.47, P = .005, adjusted R2 = .07] and Tough-Mindedness [F(4360) = 5.17, P = .003, adjusted R2 = .07] primary scales showed that shy (β= .19, P= .013), reserved (β= .18, P= .002), traditional (Independence model: β= .21, P= .003; Tough- Mindedness model: β= .24, P= .002) and vigilant (β= .15, P= .012) people perceived high risks. The regression analysis on Extroversion primary scales showed that Liveliness (β=−.19, P= .025) and Social Boldness (β=−.15, P= .031) negatively predicted risk perception [F (5359) = 3.14, P = .001, adjusted R2 = .04].

Finally as for the perception of returns, the regressions showed that Tension (β=−.17, P= .030) was the significant primary scale for the Anxiety global factor [F(4190) = 2.64, P = .033, adjusted R2 = .03] and Vigilance (β = .14, P = .047) for that of Independence [F (4190) = 2.76, P = .024, adjusted R2 = .03].

E. Gambetti and F. Giusberti Journal of Behavioral and Experimental Economics 80 (2019) 14–24

22

References

Ackert, Lucy F., 2014. Traditional and behavioral finance. In: Kent Baker, H., Riccardi, Victor (Eds.), Investor Behavior: The Psychology of Financial Planning and Investing. John Wiley & Sons, New Jersey, pp. 25–41.

Ali, Azwadi, 2011. “Predicting individual investors’ intention to invest: An experimental analysis of attitude as a mediator. Int. J. Soc. Behav. Edu. Econ. Bus. Ind. Eng. 5 (2), 157–164 doi: scholar.waset.org/1307-6892/12254.

Bailey, Jeffrey J., Kinerson, Chris, 2005. “Regret avoidance and risk tolerance. J. Financ. Couns. Plan. 16 (1), 23–28.

Baiocco, Roberto, Laghi, Fiorenzo, D'Alessio, Maria, 2009. “Decision-making style among adolescents: Relationship with sensation seeking and locus of control. J. Adolesc. 32 (4), 963–976. https://doi.org/10.1016/J.adolescence.2008.08.003.

Bensi, Luca, Giusberti, Fiorella, 2007. “Trait anxiety and reasoning under uncertainty. Pers. Individ. Dif. 43 (4), 827–838. https://doi.org/10.1016/j.paid.2007.02.007.

Blades, Derek W., Sturm, Peter H., 2016. The concept and measurements of savings: The United States and other industrialized countries. Savings and Government Policy, Conference Series, n 25. Federal Reserve Bank of Boston, Boston, pp. 1–30.

Brandstätter, Hermann, Königstein, Manfred, 2001. “Personality influences on ultimatum bargaining decisions. Eur. J. Pers. 15 (1), 53–70. https://doi.org/10.1002/per.424.

Brown, Sarah, Taylor, Karl, 2014. “Household finances and the ‘big five’ personality traits. J. Econ. Psychol. 45, 197–212. https://doi.org/10.1016/j.joep.2014.10.006.

Campbell, John Y., 2006. “Household finance. J. Finance 61 (4), 1553–1604. https://doi. org/10.1111/j.1540-6261.2006.00883.x.

Cattell, Heater E.P., Schuerger, James M., 2003. Essentials of 16PF Assessment. John Wiley & Sons, New Jersey.

Cattell, Raymond B., Cattell, Karen S., Cattell, Heater E.P., 1993. 16PF Fifth Edition Questionnaire. Institute for Personality and Ability Testing, Champaign, IL.

Cattell, Raymond B., Eber, Herbert, Tatsuoka, Maurice, 1970. Handbook For the Sixteen Personality Factor Questionnaire. Institute for Personality and Ability Testing, Champaign, IL.

Chen, Yuh-Jia, Corter, James E, 2005. “When mixed options are preferred in multiple- trial decision making. J. Behav. Decis. Mak. 18 (1), 1–26. https://doi.org/10.1002/ bdm.512.

Consob, 2016. Report on financial investments of Italian households. Retrieved from: http:// www.consob.it/documents.

Costa, Paul T., McCrae, Robert R., 1992. “Normal personality assessment in clinical practice: The NEO personality inventory. Psychol. Assess. 4 (1), 5–13. https://doi. org/10.1037/1040-3590.4.1.5.

Crossley, Craig D., Highhouse, Scott, 2005. “Relation of job search and choice process with subsequent satisfaction. J. Econ. Psychol. 26 (2), 255–268 doi: dx.doi.org/ 10.1016/j.joep.2004.04.001.

Dewberry, Chris, Juanchich, Marie, Narendran, Sunitha, 2013. Decision-making compe- tence in everyday life: The roles of general cognitive styles, decision-making styles and personality. Pers. Individ. Dif. 55 (7), 783–788. https://doi.org/10.1016/j.paid. 2013.06.012.

Dohmen, Thomas, Falk, Armin, Huffman, David, et al., 2011. “Individual risk attitudes: Measurement, determinants, and behavioral consequences. J. Eur. Econ. Assoc. 9 (3), 522–550. https://doi.org/10.1111/j.1542-4774.2011.01015.x.

Donnelly, Grant, Iyer, Ravi, Howell, Ryan T., 2012. “The big five personality traits, ma- terial values, and financial well-being of self-described money managers. J. Econ. Psychol. 33 (6), 1129–1142. https://doi.org/10.1016/j.joep.2012.08.001.

Durand, Robert, Newby, Rick, Sanghani, Jay, 2008. “An intimate portrait of the in- dividual investor. J. Behav. Finance 9 (4), 193–208. https://doi.org/10.1080/ 15427560802341020.

Dwyer, Peggy D., Gilkeson, James H., List, John H., 2002. “Gender differences in revealed risk taking: Evidence from mutual fund investors. Econ. Lett. 76 (2), 151–158.

Fenton O'Creevy, Mark, Nicholson, Nigel, Soane, Emma, Willman, Paul, 2004. Traders: Risks, decisions, and Management in Financial Markets. Oxford University Press, Oxford.

Gambetti, Elisa, Giusberti, Fiorella, 2012. “The effect of anger and anxiety traits on in- vestment decisions. J. Econ. Psychol. 33 (6), 1059–1069. https://doi.org/10.1016/j. joep.2012.07.001.

Gambetti, Elisa, Fabbri, Marco, Bensi, Luca, Tonetti, Lorenzo, 2008. A contribution to the Italian Validation of the General Decision-Making Style Inventory. Pers. Ind. Dif. 44 (4), 842–852. https://doi.org/10.1016/j.paid.2007.10.017.

Goldberg, Lewis R., 1990. An alternative “description of personality”: The big-five factor structure. J. Pers. Soc. Psychol. 59 (6), 1216–1229.

Goodman, J., 2003. Homeownership and investment in real estate stocks. J. Real Est. Port. Manag. 9 (2), 93–105.

Grable, John E., Joo, So Hyun, 2004. Environmental and biophysical factors associated with financial risk tolerance. J. Financ.Couns. Plan. 15 (1), 73–82.

Grinblatt, Mark, Keloharju, Matti, 2009. Sensation seeking, overconfidence, and trading activity. J. Finance 64 (2), 549–578. https://doi.org/10.1111/j.1540-6261.2009. 01443.x.

Hogarth, Robin M., Einhorn, Hillel J., 1992. “Order effects in belief updating: The belief- adjustment model. Cognit. Psychol. 24 (1), 1–55. https://doi.org/10.1016/0010- 0285(92)90002-J.

Hopfensitz, Astrid, van Winden, Frans, 2008. Dynamic choice, independence and emo- tions. Theory Decis. 64 (2–3), 249–300. https://doi.org/10.1007/s11238-007- 9058-y.

Jamal, Amer Azlan Abdul, Ramlan, Wijaya Kamal, Pazim, Khairul Hanim, Budin, Dayang Safrina Ag, 2014. Decision-making style and investment success of retail investors in Malaysia. Int. J. Bus. Soc. Sci. 5 (9), 311–322.

Jia, Jayson S., Khan, Uzma, Litt, Ab, 2015. “The effect of self-control on the construction

of risk perceptions. Manag. Sci. 61 (9), 2259–2280. https://doi.org/10.1287/mnsc. 2014.2098.

Judge, Timothy A., Bono, Joyce E., 2001. “Relationship of core self-evaluations traits - self-esteem, generalized self-efficacy, locus of control, and emotional stability - with job satisfaction and job performance: A meta-analysis. J. Appl. Psychol. 86 (1), 80–92. https://doi.org/10.1037//0021-9010.86.1.80.

Kowert, P.A., Hermann, M.G., 1997. Who takes risks? Daring and caution in foreign policy making. J. Conflict Resolut. 41 (5), 611–637.

Kozhevnikov, Maria, 2007. “Cognitive styles in the context of modem psychology: Toward an integrated framework of cognitive style. Psychol. Bull. 133 (3), 464–481. https://doi.org/10.1037/0033-2909.133.3.464.

Lauriola, Marco, Panno, Angelo, Levin, Irwin P, Lejuez, Carl W., 2014. Individual dif- ferences in risky decision making: A meta-analysis of sensation seeking and im- pulsivity with the balloon analogue risk task. J. Behav. Decis.Mak. 27 (1), 20–36. https://doi.org/10.1002/bdm.1784.

Leykin, Yan, DeRubeis, Robert J., 2010. Decision-making styles and depressive sympto- matology. Judgm. Decis. Mak. 5 (7), 506–515. https://doi.org/10.1007/s10608-010- 9308-0.

Lorenz, D., Trück, S., 2008. Risk and return in European property markets: an empirical investigation. J. Eur. Real Estate Res. 1 (3), 235–253.

Maner, Jon K., Anthony Richey, J., Cromer, Kiara, Mallott, Mike, et al., 2007. “Dispositional anxiety and risk-avoidant decision-making. Pers. Individ. Dif. 42 (4), 665–675. https://doi.org/10.1016/j.paid.2006.08.016.

Mayfield, Cliff, Perdue, Grady, Wooten, Kevin, 2008. “Investment management and personality type. Financ. Services Rev. 17, 219–236.

McCrae, Robert R., Costa, Paul T., 2004. “A contemplated revision of the NEO Five-Factor Inventory. Pers.Individ. Dif. 36 (3), 587–596. https://doi.org/10.1016/S0191- 8869(03)00118-1.

Mudrack, Peter, 2007. “Individual personality factors that affect normative beliefs about the rightness of corporate social responsibility. Bus. Soc. 46 (1), 33–62. https://doi. org/10.1177/0007650306290312.

Muhammad, Nik Maheran Nik, Abdullah, Mazurainy, 2009. Investment decision-making style: Are Malaysian investors rational decision makers? Interdiscipl. J. Contemp. Res. Bus. 1 (3), 96–108.

Nyhus, Ellen K., Webley, Paul, 2001. The role of personality in household saving and borrowing behaviour. Eur. J. Pers. 15 (1), 85–103. https://doi.org/10.1002/per.422.

Oehler, Andreas, Wendt, Stefan, Wedlich, Florian, Horn, Matthias, 2017. “Investors' personality influences investment decisions: Experimental evidence on extraversion and neuroticism. J. Behav. Finance. https://doi.org/10.1080/15427560.2017. 1366495.

Olsen, Robert A., Cox, Constance M., 2001. The influence of gender on the perception and response to investment risk: The case of professional investors. J. Psychol. Financ. Mark. 2 (1), 29–36. https://doi.org/10.1207/S15327760JPFM0201_3.

Pacini, Rosemary, Epstein, Seymour, 1999. The relation of rational and experiential in- formation processing styles to personality, basic beliefs, and the ratio-bias phenom- enon. J. Pers. Soc. Psychol. 76 (6), 972–987. https://doi.org/10.1037//0022-3514. 76.6.972.

Parker, Andrew M., Fischhoff, Baruch, 2005. Decision-making competence: External va- lidation through an individual differences approach. J. Behav. Decis. Mak. 18 (1), 1–27. https://doi.org/10.1002/bdm.481.

Paunonen, Sampo V., Ashton, Michael C., 2001. Big five factors and facets and the pre- diction of behavior. J. Pers. Soc. Psychol. 81 (3), 524–539. https://doi.org/10.1037// 0022-3514.81.3.524.

Pinjisakikool, Teerapong, 2017. The influence of personality traits on households’ fi- nancial risk tolerance and financial behaviour. J. Interdiscipl. Econ. 30 (1), 32–54. https://doi.org/10.1177/0260107917731034.

Rahman, Saidur, H.M., 2014. Personality and decision making styles of university stu- dents. J. Indian Acad. Appl. Psychol. 40 (1), 138–144. https://doi.org/10.1007/ s40894-015-0003-y.

Riaz, Lubna, Hunjra, Ahmed Imran, Azam, Rauf-i, 2012a. Impact of psychological factors on investment decision making mediating by risk perception: A conceptual study. Middle East J. Sci. Res. 12 (6), 789–795.

Riaz, Muhammad Naveed, Riaz, Muhammad Akram, Batool, Naila, 2012b. “Personality types as predictors of decision making styles. J. Behav. Sci. 22 (2), 100–114.

Rizvi, Saima, Fatima, Amreen, et al., 2015. Behavioral finance: A study of correlation between personality traits with the investment patterns in the stock market. In: Chatterjee, Sanghamitra (Ed.), Managing in Recovering Markets. Springer, New DelhiIndia, pp. 143–155.

Robb, Cliff A., Woodyard, Ann S., 2011. Financial knowledge and best practice behaviour. J. Financ. Couns. Plan. 22 (1), 60–70.

Roberts, Brent W., Wood, Dustin, Smith, Jennifer L., 2005. “Evaluating five factor theory and social investment perspectives on personality trait development. J. Res. Pers. 39 (1), 166–184. https://doi.org/10.1016/j.jrp.2004.08.002.

Rossier, Jérôme, Meyer de Stadelhofen, Franz, Berthoud, Samuel, 2004. The hierarchical structures of the NEO PI-R and the 16PF-5. Eur. J. Psychol. Assess. 20 (1), 27–38. https://doi.org/10.1027/1015-5759.20.1.27.

Russell, Mary T., Karol, Darcie L., 2001. 16PF-5 di Raymond B. Cattell, A. Karen S. Cattell e Heather E. P. Cattell: manuale. Adattamento Italiano Di Saulo Sirigatti e Cristina Stefanile. O. S, Firenze.

Scott, Susanne G., Bruce, Reginald A., 1995. Decision-making style: The development and assessment of a new measure. Educ. Psychol. Meas. 55 (5), 818–831. https://doi.org/ 10.1177/0013164495055005017.

Seo, Myeong-Gu, Goldfarb, Brent, Barrett, Lisa Feldman, 2010. Affect and the framing effect within individuals over time: Risk taking in a dynamic investment simulation. Acad. Manag. J. 53 (2), 411–431. https://doi.org/10.1080/10508422.2014.941980.

Steul, Martina, 2006. Does the framing of investment portfolios influence risk-taking

E. Gambetti and F. Giusberti Journal of Behavioral and Experimental Economics 80 (2019) 14–24

23

behavior? Some experimental results. J. Econ. Psychol.y 27 (4), 557–570. https:// doi.org/10.1016/j.joep.2005.12.002.

Tabachnick, Barbara G., Fidell, Linda S., 2007. Using Multivariate Statistics, 4th ed. Allyn and Bacon, Boston.

Thunholm, Peter, 2004. Decision-making style: habit, style, or both? Pers. Individ. Dif. 36 (4), 931–944. https://doi.org/10.1016/S0191-8869(03)00162-4.

van Winden, Frans, Krawczyk, Mical, Hopfensitz, Astrid, 2011. “Investment, resolution of risk, and the role of affect. J. Econ. Psychol. 32 (6), 918–939. https://doi.org/10.

1016/j.joep.2011.07.007. Wood, Nicole L., Highhouse, Scott, 2014. Do self-reported decision styles relate with

others’ impressions of decision quality? Pers. Individ. Dif. 70, 224–228. https://doi. org/10.1016/j.paid.2014.06.036.

Zuckerman, Marvin, Kuhlman, D.Michael, 2000. Personality and risk-taking: common biosocial factors. J. Pers. 68 (6), 999–1029. https://doi.org/10.1111/1467-6494. 00124.

E. Gambetti and F. Giusberti Journal of Behavioral and Experimental Economics 80 (2019) 14–24

24