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The Behavioral Genetics of Behavioral Anomalies


  • David Cesarini

    () (Center for Experimental Social Science and Department of Economics, New York University, New York, New York 10012; and IFN-Research Institute of Industrial Economics, SE-102 15 Stockholm, Sweden)

  • Magnus Johannesson

    () (Department of Economics, Stockholm School of Economics, SE-113 83 Stockholm, Sweden)

  • Patrik K. E. Magnusson

    () (Department of Medical Epidemiology and Biostatistics, Karolinska Institutet, SE-171 77 Stockholm, Sweden)

  • Björn Wallace

    () (Department of Economics, Stockholm School of Economics, SE-113 83 Stockholm, Sweden)


A number of recent papers have examined the environmental and genetic sources of individual differences in economic and financial decision making. Here we contribute to this burgeoning literature by extending it to a number of key behavioral anomalies that are thought to be of importance for consumption, savings, and portfolio selection decisions. Using survey-based evidence from more than 11,000 Swedish twins, we demonstrate that a number of anomalies such as, for instance, the conjunction fallacy, default bias, and loss aversion are moderately heritable. In contrast, our estimates imply that variation in common environment explains only a small share of individual differences. We also report suggestive evidence in favor of a shared genetic architecture between cognitive reflection and a subset of the studied anomalies. These results offer some support for the proposition that the heritable variation in behavioral anomalies is partly mediated by genetic variance in cognitive ability. Taken together with previous findings, our results underline the importance of genetic differences as a source of heterogeneity in economic and financial decision making. This paper was accepted by Brad Barber, Teck Ho, and Terrance Odean, special issue editors.

Suggested Citation

  • David Cesarini & Magnus Johannesson & Patrik K. E. Magnusson & Björn Wallace, 2012. "The Behavioral Genetics of Behavioral Anomalies," Management Science, INFORMS, vol. 58(1), pages 21-34, January.
  • Handle: RePEc:inm:ormnsc:v:58:y:2012:i:1:p:21-34

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    References listed on IDEAS

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    4. Marco Pleßner, 2017. "The disposition effect: a survey," Management Review Quarterly, Springer;Vienna University of Economics and Business, vol. 67(1), pages 1-30, February.
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    6. Wernerfelt, Nils Christian & Rand, David Gertler & Lum, J. Koji & Zeckhauser, Richard Jay & Dreber, Anna & Garcia, Justin, 2011. "The Dopamine Receptor D4 Gene (DRD4) and Self-Reported Risk Taking in the Economic Domain," Scholarly Articles 5347066, Harvard Kennedy School of Government.
    7. Arunachalam Narayanan & Brent B. Moritz, 2015. "Decision Making and Cognition in Multi-Echelon Supply Chains: An Experimental Study," Production and Operations Management, Production and Operations Management Society, vol. 24(8), pages 1216-1234, August.
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