Risk investment personalities

Risk is an essential element of the life.  There is always the chance that something won’t work out for us and this chance is called risk. Over the years, many researchers have studied the relationship between personality characteristics and entrepreneurship. In looking at the personality characteristics of entrepreneurs, it is assumed that the set of characteristics found in entrepreneurs tends to be different from those found in non-entrepreneurs. Some of the earlier work, conducted by Atkinson and McClelland looked at the needs of affiliation, power, and achievement, in entrepreneurs versus others. The researchers have concentrated on risk taking and locus of control to name just a few of the studies [Reeve, J., & Curthoys, (1999)].

Basically, there are two types of personalities concerning risk.  Knowing which one is an important step in managing the investment portfolio properly [Bleichrodt H, (2001)].

  1. Risk Taker: The first type of person is the risk taker.  This type of person never checks and reconsiders the spending options or gets a second opinion from the third party [Tversky A, (1992]. Richard Cantillon has defined “entrepreneur” as a risk taker. Specifically, it was determined that persons identified as Type A personalities were likely to maximize their achievements through additional risk taking in the attainment of increased incomes [Riley, W. B., & Chow K. V., (1992)]. Slipp (1982) also states that Type A personality individuals are more of risk-takers than risk averse in nature, even financially.
  1. Risk Avoider: The second type of person is the risk avoider. Risk avoiders hesitate to take decisions unless they have all the information at their disposal, and do not take innate financial risks (Slipp, 1982).

 

References:

  • Reeve, J., & Curthoys, C. Rural Industry Business Services, 1999.
  • Bleichrodt H., Management Science, 2001.
  • Tversky A., Journal of Risk and Uncertainty, 1992.
  • Riley, W. B., & Chow, K. V. Financial Analysts Journal, 1992.

 

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