Personality Dimensions And Measures Of Risk Tolerance: Variance/Skew And Scenario Response Assessment

Abstract

In this paper, we explore the relationship between dimensions of the Myers-Briggs Type Indicator (MBTI) and individual investor ex-ante risk tolerance. Ex-ante risk tolerance is measured using ex-ante variance and skew tolerance measures as well as industry-like Scenario Response Assessment (SRA). Our study uses survey results to relate these measures of ex-ante risk tolerance to MBTI measures. Our results indicate that personality dimensions do explain many SRA measures of individual ex-ante risk tolerance and further suggest that the relationship between personality dimensions and the industry-like individual ex-ante risk tolerance measures are generally complex and non-linear in form. Finally, our results find fewer, but still complex and non-linear, relationships between variance/skew ex-ante risk tolerance measures.