Generational theory of behavioral biases in investment behavior

This paper proposes that millennials' investing behavior is driven by generational biases-investment-related biases that millennials share. The results of an online survey of 516 millennial investors revealed that generational biases-fear of missing out, socially responsible investing, overconfidence, and herding-positively influence their investing intention. This paper makes a novel contribution to the literature on financial psychology by proposing a generational theory of behavioral biases among a key investor segment. The generational theory of behavioral biases enables investment managers to understand financial anomalies at a collective level. This work suggests that managers must provide investing avenues that enable millennials to overcome the threat of missed opportunities. Moreover, managers must build a responsible corporate image to appeal to millennials' socially responsible investing behavior. Investment managers must also launch intervention campaigns that seek to increase the financial competence of millennials.