Psychological Predictors of Ethical Behavior in Investment Contexts: A Behavioral Forecasting Model

Abstract

This study investigates the predictive role of core psychological traits, risk tolerance, and demographic variables in shaping ethical investment behavior, with an emphasis on developing a behavioral forecasting model. Using data from 444 retail investors, the study examines the influence of Neuroticism, Self-Esteem, Self-Efficacy, and Locus of Control, the sub-traits of Core Self-Evaluation (CSE), alongside the risk tolerance and demographic factors. Multiple regression results reveal that among the CSE sub-traits, only Neuroticism significantly and negatively predicts ethical investment behavior. Risk tolerance and gender also emerge as significant predictors, whereas self-esteem, self-efficacy, and locus of control show no significant effects. These findings highlight the dominant role of emotional stability and risk disposition in forecasting ethically guided financial decisions. By integrating psychological dimensions into predictive modeling, the study contributes to the growing literature on behavioral decision-making and offers valuable insights for the design of ethically attuned investment strategies and prediction markets.