Abstract
The goal of this research is to investigate to what extent gamblers and stock investors share similar characteristics. Using survey data, a hierarchical model of personality is employed to compare the traits of gamblers and investors. The results reveal that gamblers and investors share five trait characteristics and differ on three traits. Cluster analysis supports the proposal that gamblers and investors can be divided into four groups that differ across the personality traits. As a result, divergent communication strategies should be used to influence each group's propensity to invest and/or to gamble.
Notes
1. For example, Friedman and Savage [1948] present an analysis to reconcile with utility theory the apparent conflict of an individual choosing certainty by the purchasing of insurance and also choosing uncertainty by engaging in a gamble.
2. Researchers have also investigated the traits that influence the performance, for example, Hirschorn [2005]. Because we are focusing on the degree to which individuals invest in stocks and gamble, we do not review this literature.
3. Hirschhorn [2005] examined the influence of personality differences and the level of success in male traders employed full-time at U.S. trading firms with and without a competitive athletic background and found no statistical difference between athletes and nonathletes in their ability to be successful traders.
4. Guiso, Sapienza, and Zingales [2007] investigate the role of trust in stock investing, a characteristic that is not included in this research. They find that less trusting individuals are less likely to buy stock; if they do buy stock, they purchase fewer shares. More specifically, individuals who believe that financial data are reliable and that the overall system is fair have a 50% higher probability of buying stock and a 3.4% greater share of their wealth invested in stock. Future research could investigate the relationship of trust to both gambling and investing propensities in a hierarchical model.