Influence of Investor's Personality Traits and Demographics on Overconfidence Bias

Zaidi, Farheen Btool; Tauni, Muhammad Zubair
October 2012
Interdisciplinary Journal of Contemporary Research in Business;Oct2012, Vol. 4 Issue 6, p730
Academic Journal
This research was conducted in the field of Behavioral Finance, the purpose of which is to identify the relationship between Investor's Personality Traits, Demographics and Overconfidence Bias in Lahore Stock Exchange (LSE). To achieve the purpose, survey methodology was used and a questionnaire was distributed among 200 randomly selected investors out of which 170 questionnaires were used for analysis and rests were discarded due to incomplete or non serious response. The data collected was processed into SPSS 19.0 and different statistical tools were applied to obtain the results of study. Findings showed that there is a positive relationship between overconfidence bias and Agreeableness, Extroversion & Consciousness; and negative relationship between Overconfidence bias and Neuroticism. The results also showed that there is an association between investment experience and overconfidence bias. Hence, it was concluded that investor's of Lahore Stock Exchange (LSE) are not purely rational and the explanations provided by traditional financial theory do not hold true.


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