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Risk-Relevant Early Life Experiences and Individual Trading Activity

Author

Listed:
  • Cheong, Chee Seng
  • Tan, Gary
  • Zurbruegg, Ralf

Abstract

We examine the impact that risk-relevant childhood experiences have on individuals’ risk preferences when trading. By studying the trading behavior of participants in a simulated asset market, we find that a trader's experience of a major family financial loss during childhood, where their parents derived their salary from, how strict the trader's upbringing was, and birth order all have an impact on the willingness to trade. Overall, our findings contribute to the growing literature which shows that early-life experiences have an impact on adult financial risk preferences.

Suggested Citation

  • Cheong, Chee Seng & Tan, Gary & Zurbruegg, Ralf, 2021. "Risk-Relevant Early Life Experiences and Individual Trading Activity," Finance Research Letters, Elsevier, vol. 39(C).
    • Handle: RePEc:eee:finlet:v:39:y:2021:i:c:s1544612319312607
    DOI: 10.1016/j.frl.2020.101569
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Behavioral and experimental finance; Early-life experiences; Risk preferences; Trading activity;
    All these keywords.

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets

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