Over the past decades, Cloninger et al. have developed a biosocial model of personality based on four temperaments and three characteristics. This multidimensional psychobiological model of personality presents in the temperament and character inventory – revised (TCI-R) form. Temperament subscales are novelty seeking (NS), harm avoidance (HA), reward dependence (RD), and persistence (P), and character subscales are self-directedness (SD), cooperativeness (CO), and self-transcendence (ST). The study has been used in different disciplines of science, especially in psychology. Behavioral finance is one of these disciplines of science. TCI is frequently used, especially for investor biases. In this chapter, TCI is used to examine the relationship between investor biases and personality. The first three chapters are about personality. Personality, personality approaches, and personality measurement methods examined in these sections. In the fourth part, emotional biases in financial investment decisions searched. In the fifth part, literature studies showing the relationship between personality and financial decisions included. Finally, a field survey is conducted, and findings are revealed.
TopIntroduction
Personality
Personality is a sequence of behaviors, attitudes, and experiences that explain the reactions of one person to other persons and their surroundings (Stuart-Hamilton, 2007). The concept of personality, which thought to derived from masks called “persona” used by classical Roman theater players, is used to describe the differences between individuals (Evrim, 1967). Shiffman and Kanuk also define personality as follows: “the distinctive and characteristic patterns of thought and behavior that define the individual's interaction with the physical and social environment” (Shiffman and Kanuk, 2004).
In his study titled 'Personality: A Psychological Commentary' (1937), Allport mentioned nearly 50 definitions, and he also suggested a definition of the personality phenomenon in the same work. According to Allport, personality is “the dynamic structuring of psychophysical systems that determine the individual's own thinking and behavior” (Inanç and Yerlikaya, 2012).
Although there is not an absolute consensus on the definition of personality, it is possible to define the notion as 'coherent patterns of behavior and intrapersonal processes originating from the individual himself’ (Dal, 2009). The definition which is advocated by Flexner and Stein (1982) is that “personality is the sum of physical, mental, emotional and social characteristics of the individual.” Ewen also proposed a similar definition in 2003. According to Ewen; personality is in a relationship with human behavior in a broad range spectrum. Personality involves many things about the individual such as mental, emotional, social and physical aspects. Some phenomena which belong to a human being (such as dreams and thoughts) are not observable. Despite that, the physical behavior and manifestations of the person are observable. Personality includes all aspects in which the individual has a conscious or unconscious form.
While the concept of 'personality' is sometimes defined as 'the sum of all features' or as a ‘process,’ almost all of these definitions draw attention to the environmental variables because a person is always in an interaction with the inner and outer environmental factors. The individual's personality is a concept that determines the scope of the relation established by the inner and outer environmental factors (Cuceloglu, 2007). Furthermore, an individual is directed to be a sum of the national, religious, political and economic values of the society in which he lives (Büyükdüvenci, 2013).
Personality Theories
The concept of personality is described in many different ways because psychology is a very young discipline, and also a human being is a very complex creature and is not adequately suitable for being objectively studied (İnanç and Yerlikaya, 2012).
Personality development studies are the studies that try to explain the differences and development of individuals who focus on the goal of life-long self-realization in addition to the development of individual differences (Van Lieshout, 2000). Some of the approaches that explain personality development explain the formation of personality with the obvious physiological and psychological stages of life, and some with social incidents in the environment (Isır, 2006). Some theoreticians tend to search for an essential feature of personality, while others try to understand the personality differences and their causes.
Hence, as is seen, the predictions about the personality development of each theory are different. These different approaches discussed in the literature with six personality theories (Şenyuva, 2007).