TY - BOOK
T1 - Locus of control and investment in risky assets
AU - Salamanca Acosta, Nicolas
AU - de Grip, A.
AU - Fouarge, Didier
AU - Montizaan, Raymond
PY - 2016
Y1 - 2016
N2 - We show that household heads with a strong internal economic locus of control are more likely to hold equity and hold a larger share of equity in their investment portfolio. This relation holds when we control for economic preferences and possible confounders such as financial literacy, overconfidence, optimism, trust, and other personality traits. We argue that this relation is driven by a link between internal economic locus of control and a lower perception of the risk of investing inequity. Those with a strong internal economic locus of control perceive less variance in equity, making these investments more attractive.
AB - We show that household heads with a strong internal economic locus of control are more likely to hold equity and hold a larger share of equity in their investment portfolio. This relation holds when we control for economic preferences and possible confounders such as financial literacy, overconfidence, optimism, trust, and other personality traits. We argue that this relation is driven by a link between internal economic locus of control and a lower perception of the risk of investing inequity. Those with a strong internal economic locus of control perceive less variance in equity, making these investments more attractive.
KW - household portfolios
KW - personality traits
KW - risk and time preferences
KW - risk perception
M3 - Report
T3 - IZA Discussion Paper Series
BT - Locus of control and investment in risky assets
PB - IZA
CY - Bonn
ER -