A Study of Psychological Reasons for Gender Differences in Preferences for Risk and Investment Decision Making

Abstract

Men and women differ in their attitudes towards and preferences for risk while investing. Psychologists suggest that women lack confidence and are more methodical in their information processing and accumulation style. These factors contribute to the increased perception of risk in them as compared to men. The paper investigates whether women are more risk-averse than men and the reasons suggested by psychologists for the same. The study indicates that men engage in more risk taking and are more overconfident than women. Women tend to put in a major portion of their funds in low risk – low return investments. However, the study suggests that men and women do not differ in their information processing and accumulation styles.

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