Personality and Risk Aversion

Abstract

A number of papers have recently explored the relation between personality measures and risk aversion. However, research on risk aversion using the Myers-Briggs Type Indicator (MBTI) personality measure is scarce. The relation of various dimensions of the MBTI with risk aversion is at the moment under-researched compared to its use in the business and counseling world. To explore this relation, we carried out an incentivized experiment using 333 business school students. We find that according to our theoretical hypotheses, respondents scoring higher on Introversion, Sensing, Feeling and Judging are more risk averse, with the effect for Sensing and Feeling being non-linear. We also find women, Master students, respondents coming from a quantitative background and respondents that do not follow the stock markets to be more risk averse. The relations highlighted between the MBTI dimensions and risk aversion correspond broadly to the findings already evidenced using the Big 5 in studies using questionnaires or lotteries. This emphasizes the significant overlap between the two personality evaluation methods in relation to risk aversion. Our findings also underscore that the MBTI might be a useful tool in studies on risk aversion using lotteries, given the significant link of its dimensions with the elicited risk aversion in our study.

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