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.

Publication Title

Journal of Economic Psychology