Retail Investor’s Personality and Portfolio Allocation Decision: Future Research Issues

Abstract

Behavioural Finance is an emerging area which needs more investigation. The current study is an attempt to further explore some of the research issues which are still remain unanswered in the broad area of behavioural finance and particularly in the area of retail investors portfolio allocation decision. For this, the study has considered some of the past research and tried to identify the gaps in the area. After going through some of the selected recent works the study found that, in behavioural finance, one of the major psychological variables is investor biases. The biases can be broadly categorised as cognitive and emotional. The past literature has done a great deal of work on cognitive biases. The studies also have considered the impact of personality (The Big Five Model) on cognitive biases. But there are limited studies about emotional biases such as status quo, regret aversion, loss aversion, etc.