The Decision Making of a Financial Psychopath

36 Pages Posted: 23 Apr 2019

See all articles by Corey A. Shank

Corey A. Shank

Dalton State College - Division of Business Administration

Brice V. Dupoyet

Florida International University - College of Business Administration - Finance

Robert B. B. Durand

Curtin University of Technology - School of Economics and Finance - Department of Finance and Banking

Fernando Patterson

North Carolina Central University (NCCU)

Date Written: March 19, 2019

Abstract

We examine the relationship between psychopathic personality traits and financial risk and time preferences using a sample of 118 business majors. We find that Finance majors score significantly higher on machiavellian egocentricity and lower fearlessness than other majors, including other business majors. Additionally, we find that the global trait of psychopathy has a positive association with the linearity of the cumulative prospective utility function. Furthermore, the secondary trait of self-centered impulsivity is statistically significant in all models of financial risk preferences determinants under Cumulative Prospect Theory. The aforementioned results show that certain psychopathic personality traits are related to more rational financial decision making. Alternatively, other aspects of psychopathy are associated with impulsive, less rational decision making. Superficially, we find that self-centered impulsivity and stress immunity are related to a higher time-preference discount rate under quasi-hyperbolic time preferences.

Keywords: Financial Psychopath, Risk Aversion, Present Bias, Risk Preferences, Time Preferences

JEL Classification: A12, D03, G02, G11

Suggested Citation

Shank, Corey and Dupoyet, Brice and Durand, Robert B. B. and Patterson, Fernando, The Decision Making of a Financial Psychopath (March 19, 2019). Available at SSRN: https://ssrn.com/abstract=3355774 or http://dx.doi.org/10.2139/ssrn.3355774

Corey Shank

Dalton State College - Division of Business Administration ( email )

Dalton, GA 30720
United States

Brice Dupoyet (Contact Author)

Florida International University - College of Business Administration - Finance ( email )

University Park, RB 209 A
11200 SW 8th Street
Miami, FL 33199
United States
305-348-3328 (Phone)
305-348-4245 (Fax)

Robert B. B. Durand

Curtin University of Technology - School of Economics and Finance - Department of Finance and Banking ( email )

Bentley 6102 WA
Australia

HOME PAGE: http://tiny.cc/y85rh

Fernando Patterson

North Carolina Central University (NCCU) ( email )

Durham, NC 27707
United States

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