Investor interest in cryptocurrency is driven by greed and a need for the challenge of considering market information, a QUT-led study has found.
- Study of personality characteristics of cryptocurrency investors
- Two personality traits pertinent to understanding cryptocurrency investor interest
- A greedy disposition and need to process information are two key traits
First author Professor Brett Martin from QUT’s School of Advertising, Marketing and Public Relations, said the researchers studied consumer personality and perceptions of cryptocurrency to gain insight into the drivers of consumers’ investment decisions under risk.
“We found that people who like to consider information (that is, have a high need for cognition (NFC)) and who are higher on the greed spectrum are interested in cryptocurrency,” Professor Martin said.
“In addition, they experience ‘harmonious passion’ and tend to find selecting crypto to invest in as a positive, life-enhancing activity.
“This research offers insight showing how consumer personality affects cryptocurrency and share investing.”
Professor Martin (pictured left) said that because cryptocurrency and stock investments involved decision-making under risk of losing or gaining money, prior research had called for investigation of individual differences in traits and motivation that influenced risk-related decision-making.
“We answered the call with this study of two relevant traits – dispositional greed and need for cognition – that are involved in financial decisions such as investing in cryptocurrencies and buying shares,” he said.
“Importantly, the research also showed that people view investing in cryptocurrency in a similar way to investing in shares.”
The researchers surveyed 258 people in the UK, who were aware of cryptocurrency and who had investing experience, to assess their attitude toward cryptocurrency and their intention to buy it.
They then assessed the participants’ NFC and dispositional greed using standards tests and used a 14-item scale to assess two mediators - harmonious and obsessive passion.
Professor Martin said dispositional greed was a desire to acquire more of a valued item.
“Dispositional greed refers to the extent to which a person is greedy, while need for cognition (NFC) involves the extent to which a person engages in and enjoys thinking, especially when it requires effort.
“Higher NFC people seek out, process and elaborate information systematically, while lower NFC people prefer quick, low effort, rule-of-thumb based decisions. Thus, NFC is relevant to investing which can involve weighing up numerous financial ratios.
“We also looked at the mediators, harmonious passion (HP) or obsessive passion (OP) to help explain individual differences in relation to greed and NFC.
“HP is where a person freely chooses to engage in an activity that is in harmony with other aspects of their life, while OP represents an uncontrollable desire to engage in the activity that one has passion for.
“Our research shows that the effect of dispositional greed and NFC on judgments is driven by a psychological state of passion, specifically HP.
“In other words, the effects of dispositional greed and NFC are driven by a view of investing as an enjoyable, voluntary activity that adds to one’s life, not an obsessive activity."
Professor Martin said the present research had implications for various stakeholders.
“For financial advisors, our research suggests that information appeals (vs low-information and emotional appeals) would be attractive to crypto investors as it would appeal to high-NFC investors,” he said.
“The influence of dispositional greed could also indicate that aspirational appeals showing financial success would attract consumers.
“In terms of message content, appeals should show investing as an enjoyable part of a consumer's lifestyle.”
The researchers are Professor Martin, Professor Polymeros Chrysochou from Aarhus University, Denmark and Professor Carolyn Strong from Cardiff University, UK.
Effects of dispositional greed and need for cognition on consumer judgments of cryptocurrency and stocks was published in the Journal of Consumer Behaviour.
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