The Genetics of Investment Biases
48 Pages Posted: 23 Feb 2012 Last revised: 21 Aug 2013
Date Written: August 20, 2013
For a long list of investment "biases," including lack of diversification, excessive trading, and the disposition effect, we find that genetic differences explain up to 45% of the remaining variation across individual investors, after controlling for observable individual characteristics. The evidence is consistent with a view that investment biases are manifestations of innate and evolutionary ancient features of human behavior. We find that work experience with finance reduces genetic predispositions to investment biases. Finally, we find that even genetically identical investors, who grew up in the same family environment, often differ substantially in their investment behaviors due to individual-specific experiences or events.
Keywords: Household finance, behavioral finance, individual investor behavior
Suggested Citation: Suggested Citation
Do you have a job opening that you would like to promote on SSRN?
The Origins of Savings Behavior
By Henrik Cronqvist and Stephan Siegel
Ambiguity Aversion and Familiarity Bias: Evidence from Behavioral and Gene Association Studies
By Soo Hong Chew, Richard P. Ebstein, ...
Home Bias in Online Investments: An Empirical Study of an Online Crowdfunding Market
By Mingfeng Lin and Siva Viswanathan
Income Hedging and Portfolio Decisions
By Yosef Bonaparte, George M. Korniotis, ...
Genetics, Homeownership, and Home Location Choice
By Henrik Cronqvist, Florian Münkel, ...
Income Hedging, Dynamic Style Preferences, and Return Predictability
By Jawad M. Addoum, Stefanos Delikouras, ...
Value versus Growth Investing: Why Do Different Investors Have Different Styles?
By Henrik Cronqvist, Stephan Siegel, ...
An Experimental Study of Attitude towards Compound Lottery
By Bin Miao and Songfa Zhong
By Soo Hong Chew, Bin Miao, ...