Investor Psychology and Sustainable Finance

52 Pages Posted: 23 Mar 2019

See all articles by Ola Mahmoud

Ola Mahmoud

University of California, Berkeley; University of Zurich

Date Written: February 28, 2019

Abstract

Although significant attention has been paid to the incorporation of sustainability criteria into investment decisions, these remain far from a mainstream practice. Starting with the view that the notion of “doing good while doing well” is inconsistent, this paper argues that this paradigm warrants a behavioral foundation. To this end, I propose a theoretical model of preferences for sustainable investing; sketch the empirical and experimental evidence regarding investor psychology as a determinant of sustainable investing; suggest an array of fundamental behavioral parameters that have yet to be explored; and outline ways for leveraging insights from behavioral economics to nudge investors towards sustainability.

Keywords: sustainable finance, investor behavior, heuristics and biases

JEL Classification: G11, G41, D01, D91, Q50

Suggested Citation

Mahmoud, Ola, Investor Psychology and Sustainable Finance (February 28, 2019). Available at SSRN: https://ssrn.com/abstract=3344786 or http://dx.doi.org/10.2139/ssrn.3344786

Ola Mahmoud (Contact Author)

University of California, Berkeley ( email )

Center for Risk Management Research
Evans Hall
Berkeley, CA 94720
United States

University of Zurich ( email )

Schönberggasse 1
Zürich, 8001
Switzerland

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