Is Demographic Information Influence Risk Tolerance/Aversion in Investment Decision? Evidences from Literature Review

Abstract

Investment decisions are usually being complicated by emotional process, mental mistakes and individual personality traits. In almost every important economic decision, the concept of risk in one hand, and uncertainty on the other hand, play a major function. Consequently, the objective of having an understanding and at the same time predicting the behaviour of an economy is intimately linked to understanding individual attitudes towards risk. behavioural finance happens to be a contemporary field that tends to merge the theory of behavioural cognitive psychology with conventional economics and finance with a view to giving reasons on why individuals made financial decisions that are irrational. The focus of behavioural finance is to study the final decision-making process and risk judgement of investors taking into consideration the theories and concepts that influences them. During investment decision making, the behaviour of an investor is affected by several factors. One of such decision influencing factors among others is demographic profile of investors. Different attitudes towards decision making were exhibited by respondents with diverse occupation, marital status, family size, income level, age and gender. They were also grouped into adverse risk and risk seeker.