Identifying psychological traits and their impact on an individual's ability to financial forecast

• Main Authors: Lee, Zames Zhi Heng, Fong, Wei Yao, Koh, Daniel Shield Yee Cher
• Other Authors: Bao Te
• Format: Final Year Project
• Language: English
• Published: Nanyang Technological University 2023
• Subjects: Social sciences::Economic theory
• Online Access: https://hdl.handle.net/10356/166574
• Institution: Nanyang Technological University

Do psychological traits affect an individual’s ability to carry out financial forecasting? While traditional economic theories had deemed financial forecasting irrelevant, alternative theories such as behavioural economics were conceptualised to bridge the gaps within existing literature. To better understand this correlation, pre-registered learning-to-forecast experiments (LtFE) and other tests such as the eye gaze test were conducted to measure their varying levels of psychological traits. Findings suggest that Theory of Mind (ToM), and an individual’s cognitive ability is positively correlated to financial forecasting accuracy. However, ToM and the other psychological traits proved to be statistically insignificant in explaining the relationship between psychological traits and financial forecasting prowess, prompting further studies to be done in the future to explore this correlation.