Commenced in January 2007
Frequency: Monthly
Edition: International
Paper Count: 2

herding Related Publications

2 How Herding Bias Could be Derived from Individual Investor Types and Risk Tolerance?

Authors: Huei-Wen Lin

Abstract:

This paper is to clarify the relationship of individual investor types, risk tolerance and herding bias. The questionnaire survey investigation is conducted to collect 389 valid and voluntary individual investors and to examine how the risk tolerance plays as a mediator between four types of personality and herding bias. Based on featuring BB&K model and reviewing the prior literature of psychology, a linear structural model are constructed and further used to evaluate the path of herding formation through the analysis of Structural Equation Modeling (SEM). The results showed that more impetuous investors would be prone to herding bias directly, but rather exhibit higher risk tolerance. However, risk tolerance would fully mediate between the level of confidence (i.e., confident or anxious) and herding bias, but not mediate between the method of action (careful or impetuous) for individual investors.

Keywords: risk tolerance, herding, investor types

Procedia APA BibTeX Chicago EndNote Harvard JSON MLA RIS XML ISO 690 PDF Downloads 3620
1 Elucidating the Influence of Demographics and Psychological Traits on Investment Biases

Authors: Huei-Wen Lin

Abstract:

This study explored the relationship between psychological traits, demographics and financial behavioral biases for individual investors in Taiwan stock market. By using questionnaire survey method conducted in 2010, there are 554 valid convenient samples collected to examine the determinants of three types of behavioral biases. Based on literature review, two hypothesized models are constructed and further used to evaluate the effects of big five personality traits and demographic variables on investment biases through Structural Equation Model (SEM) analysis. The results showed that investment biases of individual investors are significantly related to four personality traits as well as some demographics.

Keywords: Behavioral finance, Personality Traits, overconfidence, Big Five, disposition effect, herding

Procedia APA BibTeX Chicago EndNote Harvard JSON MLA RIS XML ISO 690 PDF Downloads 2975