Explicit and implicit stock investment: Differences in psychological characteristics and risky behavior between college
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Explicit and implicit stock investment: Differences in psychological characteristics and risky behavior between college students majoring in financial engineering or business Junsu Park 1 & Do-Yeong Kim 2
&
Semi Oh 2
# Springer Science+Business Media, LLC, part of Springer Nature 2019
Abstract This study (a) investigates dispositional attributes regarding the risk-related personality, attitude, and behavior of college students majoring in financial engineering (FE-major group) and business (business-major group); and (b) examines whether risky behavior is differentially explained by explicit versus implicit attitude toward stock investment. The FE-major group scored consistently higher than the business-major group on measures of sensation-seeking, financial risk-taking, and computerized risktaking behavior. This pattern was also observed in the two explicit attitudinal measures of risk, whereas no group differences were noted on the two corresponding implicit measures of risk. A newly developed implicit measure of stock investment showed incremental validity in predicting risky behavior beyond the corresponding explicit measure. Keywords Risk . Personality . Explicit and implicit risk attitude . Risky behavior . Financial engineering . Stock investment
Introduction In the wake of the 2008 global financial crisis, demand has increased for specialists able to handle unstable financial market situations, especially through effective investment risk management (McCarthy et al. 2012). Consequently, the South Korean government has designated the financial industry a new core growth engine for economic revitalization, and has actively initiated national research projects such as the World Class University (WCU) project, which is intended to develop a new educational program that nurtures financerelated human resources by suppodrting a specific academic field—in this case, financial engineering (Ministry of Education and Science Technology 2008). Major public and private universities in South Korea have launched academic financial engineering (FE) programs with a curriculum
* Do-Yeong Kim [email protected] 1
Department of Psychology, Barnard College, Columbia University, New York, NY, USA
2
Graduate Department of Global Management, School of Business, Ajou University, Suwon, South Korea
focusing exclusively on financial knowledge, techniques, and skills. Similar initiatives have been implemented in universities across the US, Europe, and Asia (QS WUR 2018). This approach is not without drawbacks. As indicated by the concept of bounded rationality (Simon 1972), humans frequently fall prey to psychological biases (e.g., overconfidence, confirmation bias, and an illusion of control) and thus make systematic errors of judgment when they encounter complex situations in domains such as finance, law, and medicine (Hilton 2001). Nevertheless, some work has been done to expand knowledge related to psychological and behavioral attributes in a sample of future finance specialists. Recently, Sjöberg and Engelberg (2009) sough
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