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Does well‐being impact individuals’ risky decisions and susceptibility to cognitive bias?

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  • Carly Moulang
  • Maria Strydom

Abstract

This article explores the relation between individual well‐being, risky decision‐making, susceptibility to cognitive biases and investor beliefs about investing. A survey of one hundred and two individuals revealed that those with higher satisfaction with life are more prone to taking risks. In a loss frame, participants who were most likely to take a gamble had higher levels of psychological, social and overall well‐being. Lower levels of satisfaction with life were found to impact the susceptibility of the reflection effect cognitive bias. In addition to this, well‐being was found to be associated with investment beliefs, particularly those concerning diversification, the need to be alert and active, and the risk/return trade‐off.

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  • Carly Moulang & Maria Strydom, 2018. "Does well‐being impact individuals’ risky decisions and susceptibility to cognitive bias?," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 58(S1), pages 493-527, November.
    • Handle: RePEc:bla:acctfi:v:58:y:2018:i:s1:p:493-527
    DOI: 10.1111/acfi.12339
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    1. Zhijuan Chen & William T. Lin & Changfeng Ma & Kent Wang, 2020. "Are individual investors liquidity providers around earnings announcements? Evidence from an emerging market," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 60(4), pages 3447-3475, December.
    2. Robert Powell & Anh Do & Denise Gengatharen & Jaime Yong & Rasiah Gengatharen, 2023. "The relationship between responsible financial behaviours and financial wellbeing: The case of buy‐now‐pay‐later," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 63(4), pages 4431-4451, December.

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