Proceedings of the 14th International Conference on New Ideas in Management, Economics, and Accounting
Year: 2025
DOI:
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The Influence of Personality Traits and Psychological Biases on Financial Decision-Making: Evidence from Albanian Investors
PhD. Blerina Dervishaj
ABSTRACT:
This study examines the interplay between personality traits and psychological biases in influencing investors’ decision-making, focusing on the behavioral patterns of Albanian investors. Using the Big Five Personality Model and behavioral finance concepts, the paper explores how personality dimensions—openness, conscientiousness, extraversion, agreeableness, and neuroticism—correlate with biases such as overconfidence, loss aversion, herding, and regret aversion. Empirical analysis employs Pearson correlation to assess relationships between these traits and biases, revealing significant patterns. For instance, extraversion and openness positively correlate with overconfidence, while neuroticism shows a dual role, linking positively with herding and loss aversion but negatively with overconfidence. Conversely, openness negatively correlates with herding bias, highlighting its role in fostering independent investment decisions. The findings offer insights into behavioral finance by illustrating how Albanian investors’ collective experiences, shaped by socio-economic history, amplify psychological biases. These results can inform tailored strategies to mitigate bias impacts and enhance decision-making, providing value for financial advisors and policymakers.
keywords: Behavioral Finance, Personality Traits, Big Five Model, Psychological Biases, Financial Decision-Making, Correlation Analysis