The Effect of Demographic Factors on Investor’s Risk Tolerance using Fuzzy Analytic Hierarchy Process

Abstract

This paper attempts to achieve three objectives, first: to investigate the effect of demographic factors of the investor (age, gender, number of dependents, level of education, occupation, average monthly income, investment experience and net wealth) on investor’s risk tolerance using FAHP. Second: to identify the difference or agreement between the results of AHP and those of FAHP. Finally: to identify the difference or agreement between investor’s risk tolerance calculated by the expert (using the suggested model) and those estimated by the investor. Results show that all indicated demographic factors may affect investor's risk tolerance, where middle-aged, male, small numbers of dependents, high qualification, business owner, high-income, long-term investment experience and High-net wealth are more risk tolerance than others. Beside, findings indicate that there is no significant difference between the results of FAHP and those of AHP, and that there is no significant difference between the risk tolerance levels calculated by the expert (using the suggested model) and those estimated by the investor.