Essays in Behavioral Finance
- This paper studies the influence of dark personality traits, machiavellianism, narcissism and psychopathy on several behavioral biases. Using survey data and a multiple linear regression framework, a relationship between the dark triad and home bias, overconfidence and herd mentality was found on a data set of 298 individuals. The relation is particularly pronounced for US nationals. US subjects with more pronounced dark traits are more vulnerable to overconfidence and herd mentality, but less affected by the home bias.
- This paper examines the relationship between the disposition effect and personality traits and aims to find an additional explanation of this bias in a willingness to pay for admiration. We conduct a personality assessment, a stock trading game and a sealed-bid English auction for 84 individual investors. The gathered data correspond with the literature on a descriptive level; however, even though admirationseeking behavior is an important part of social interaction, there is no significant willingness to pay for it. Furthermore, we do not see any influence of personality on the disposition effect. Our findings add to the ongoing discussion of personality traits in connection with behavioral biases.
- This paper studies the relationship between the intent dimension of social media postings and stock metrics such as trading volume and returns. Thereby, the paper contributes to the literature that studies the short squeeze phenomenon around GameStop focusing on textual sentiment. I use data from December 2020 to September 2021 and a vector autoregression model framework to study the connection between investor intent, textual sentiment, and stock metrics. I find that strong appeal of potential investors to hold onto investments significantly reduces stock volume in the short term. Higher sentiment lead to an increase in trading volume across several stocks. These findings indicate that observations made on the GameStop stock generalize to other stocks. Investor intent in social media postings can significantly impact stock markets.
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