This document discusses personality traits and their influence on investment decisions. It begins by introducing the Big Five model of personality traits - extraversion, agreeableness, openness to experience, conscientiousness, and neuroticism. Each trait is then defined. The document explains that personality influences risk tolerance and investment behavior. Several studies are summarized that examine relationships between personality traits and behavioral biases in investment decision making. The document concludes by noting a gap in research on this topic in the Indian context and proposing a research methodology to study the role of personality traits and behavioral biases in Indian equity investors' risk tolerance.

1. Personality traits and
Investment decisions

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zoo. Journal of Financial Economics, 143(2), 716-741.

3. Introduction
• The word "personality" comes from the Latin word "perso
means "mask."
• It is the sum total of our thoughts, feelings, and behaviors
• According to Gordon Allport, personality is “the dyna
organization within the individual of those psycholog
systems that determine his unique adjustments to hi
environment.”

4. Big Five Model of Personality Traits
• The Big Five Model of personality traits was developed by Allport and
Odbert in 1936.
• He claimed that one of the major psychological aspects that influence
how people behave is their personality.
• Aspects of personality qualities include neuroticism,
conscientiousness, openness, congeniality, and agreeableness.

5. Five dimension
• Extraversion: These traits reflect a person’s tendency to be outgoing, sociable, and assertive.
• Agreeableness: These traits reflect a person’s kindness, cooperation, and helpful tendency.
• Openness to experience: These traits reflect a person’s willingness to try new things and explore new ideas.
• Conscientiousness: These traits reflect a person’s tendency to be organized, hardworking, and reliable.
• Neuroticism: These traits reflect a person’s tendency to experience negative emotions, such as anxiety and
worry

6. Investment decision making
• Psychographic characteristics play a crucial influence in shaping an
individual's investment behaviour.
• Investment decision is the process of choosing where to invest
a company's money. There are many factors to consider when
making an investment decision, such as the potential return on
investment, the risk involved, and the company's financial
situation.
• When making investing decisions, an investor's risk-taking
propensity may vary depending on their personality.

7. Contin…
• In the 1990s, a new area of study known as "Behavioral Finance" emerged
from the finance literature that emphasizes psychological explanations of
market behavior.
• The term "behavioral finance "describes financial theories that are based
on psychology.
• It is an effort to comprehend how investors' behavior is influenced by
emotions and cognitive mistakes.
• It emphasizes how investors evaluate information and take action on it to
make investing decisions.
• It shows how people don't always make reasonable financial judgments
and how their behavior influences their financial decisions.

8. Year Author Research design Sample Research
Method
Findings
Liu, H. et al. 2022 Taming the bias
zoo
1000 The research
methodology
involved two
steps. First, the
authors used
the survey data
to estimate the
relative
importance of
different
behavioral
biases in
explaining the
respondents’
trading activity.
Second, they
Overconfidence
Herding
Loss aversion
Anchoring
Mental
accounting

9. Year Author Research design Sample Methodology Findings
2023 Wijaya,A. et al. The role of
financial literacy
and personality
traits in men
and women’s
decision-making
processes.
195 Questionnaire
using a Likert
scale and
analyzed using
the SMART PLS
test too
Men had a
moderating
influence on the
results than
women.
2021 Baker,H.K.& et al The relation
between the Big
Five model of
personality traits
and behavioral
biases
515 Structural
equation
modelling
Significant
association
between
Personality traits
and behavioral
biases of
individual
investors.
2019 Hamza,N. & the impact of 320 Five point Likert Financial literacy

10. Research Gap
• From the review of the literature, it can be noticed that psychological factors have
playeda major role in investors' decisions on investments.
• Though many studies have been conducted in developed nations on investor behavior,
hardly very few studies have been conducted in the Indian context.
• No study has been conducted in India to test the relationship between the big five
personality traits and investment biases among individual investors.
• Although in India, a few studies have been conducted to understand the behavioral
aspects of mutual fund investors, no study has been carried out among equity investors.
Hence there is a need to study the role of the compilation of heuristics as the mediators in
the relationship between Personality traits and investors' risk tolerance

11. Research Methodology
The research will be based on the primary data through a questionnaire and
will be conducted using a convenience sampling technique.
• The questionnaire will be prepared, and it will be filled out by various
investors with different personality traits.
• The questionnaire will be prepared to understand the views of the people
involved in Investment with special reference to Big Five Personality traits
to ensure that the investors' views of different personality dimensions
related to the Investment decision making Questionnaire will be framed
accordingly.