Influence of Personality Type on Investment Preference and Perceived Success as an Investor

Abstract

Over the last two decades, the behavioural finance literature has extensively relied on personality type to explain the non-rational behaviour of investors. This study considers Dark triad (Machiavellianism, narcissism and psychopathy) to explain its influences on investment preference and perceived success in investment. A primary survey was conducted on 227 individuals who invest in securities. Dark triad was measured using 27 items Short Triad Scale (SD3). The data were analyzed using multinomial logistic regression. The investment preference was evaluated by asking the respondents about their preferred investment avenues, individuals were asked how they evaluate their investment success. Personality variables were grouped into high, average and low based on the mean responses to the items under each variable. The results of the study indicate that individuals with low and average levels of psychopathy and low-level narcissism preferred investing only in mutual funds, bonds and equity. It was also found that Machiavellianism, narcissism, psychopathy and dark triad, all have a significant impact on investment preference. The dark triad also significantly impacted success, especially for those individuals who perceived their investment strategy as ‘Very Successful’. This study helps financial advisors to suggest appropriate portfolios or investment avenues based on their personalities.