Explaining investor behavior using an adjective check list

Using data for more than 500 investors, this study shows that propensity to seek novelty and avoid ill-defined and risky situations differs between investors who currently either own or do not own each of a wide variety of types of assets. These results give additional support to the findings of McInish (1982), Shefrin and Statman (1984) and Harlow and Brown (1990) that psychological approaches can be useful in explaining investor behavior. © 1991

Behavior of municipal bond default-risk premiums by maturity

Default-risk premiums have traditionally been considered to be an increasing function of time. More recently, a model has been developed which indicates that, under certain conditions, default-risk premiums are invariant to maturity. One study found significant differences in default-risk premiums for long-term corporate bonds and commercial paper. The hypothesis that default-risk premiums are invariant to maturity was tested using municipal bond data. Results indicate that risk premiums are not invariant to maturity. © 1980, All rights reserved

Individual investors and risk-taking

During the last decade, a large amount of information has been collected concerning financial markets and financial institutions. Less is known about individual investors. This study relates a specific personality characteristics, locus of control, to portfolio risk as measured by beta; these two concepts are described below. Locus of control and beta are examined in combination with the sex, marital status, age, educational level, asset level and number and value of common stocks held by one group of investors. The relationship between locus of control and beta is also considered. This study is divided into four parts. The first part reviews the capital asset pricing model and the construct locus of control as well as previous research relating locus of control to risky decision-making. Then, the data used in this study are discussed. The third section presents the results of this study, and the final part provides a summary. © 1982