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The Effect of Self-enhancement Perception and Confidence of Investment of Individual Investors on Risky Investment Behaviors

Korean Psychological Journal of Culture and Social Issues / Korean Psychological Journal of Culture and Social Issues, (P)1229-0661; (E)1229-0661
2007, v.13 no.3, pp.89-109


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Abstract

This study is an exploratory study on stock investment behaviors of individual investors in psychological perspective. The study is based on many behavioral finance studies which overconfidence of individual investors has an effect on irrational investment decision making and investment behaviors such as excessive trading. Accordingly, this study was to investigate the factors of self-enhancement perception on confidence of investment of individual investors and to find whether these psychological biases lead to irrational investment behaviors. The results indicated that there were sex differences in the factors of self-enhancement perception on individual investors' confidence of investment. In case of male investors, they were confident of their ability of investment but in case of female investors, they were confident of optimistic expectation of return. Also, male investors were more confident of investment than female investors. In addition, the result showed that risky investment behaviors of individual investors were influenced by psychological factors such as favorable self-evaluation, confidence of self-controllability, optimistic expectation of return and confidence of investment in part. This study suggests that further researches need to search after other variables which can mediate between psychological factors and investment behaviors of individual investors.

keywords
자기고양적 지각, 투자확신, 위험투자행동, 개인투자자, self-enhancement perception, confidence of investment, risky investment behaviors, individual investors

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Korean Psychological Journal of Culture and Social Issues