Do investors' personalities predict market winners? Experimental setting and machine learning analysis

Huan Huu Nguyen; Vu Minh Ngo; Thao Thi Phuong Le; Phuc Van Nguyen

doi:10.1016/j.heliyon.2023.e15273

Do investors' personalities predict market winners? Experimental setting and machine learning analysis

Heliyon. 2023 Apr 5;9(4):e15273. doi: 10.1016/j.heliyon.2023.e15273. eCollection 2023 Apr.

Authors

Huan Huu Nguyen¹, Vu Minh Ngo¹, Thao Thi Phuong Le¹, Phuc Van Nguyen²

Affiliations

¹ University of Economic Ho Chi Minh City, School of Banking, Address: 59C Nguyen Dinh Chieu Street, Ward 6, District 3, Ho Chi Minh City, Viet Nam.
² University of Banking Ho Chi Minh City (HUB), 36 Ton That Dam Street, Nguyen Thai Binh Ward, District 1, Ho Chi Minh City, Viet Nam.

Abstract

This study uses experiments and surveys from 146 participants who participated in equity trading to explore the predictive power of the Big-five personality traits, social behaviours, along with self-attribution and demographic characteristics on trading performance. Interestingly, we found that investors who are more open and neurotic gain higher returns compared to the market benchmark. We also found that other social traits are associated with the effectiveness of stock trading, such as awareness of social and ethical virtues (fairness and politeness). Moreover, instead of using separate characteristics, this study employs machine learning to cluster these personal features to understand the interconnection between socioeconomic determinants and financial decisions. This study contributes new evidence to the existing literature that personalities could explain trading performance.

Keywords: Big-five personality traits; Financial investment; Investors behaviors; Market winners.