Just thinking about haggling makes some people cringe. But things are way too expensive now to let an uncomfortable feeling stand in the way of a discount.

More is negotiable than you realise. Everything from your mortgage rate to your hotel room and medical bills is fair game. When you speak up, ask open-ended questions and do a little research, and you can save hundreds if not thousands of dollars.

To get in the right mind-set, think about what you might be able to offer the other party in your negotiation, perhaps in terms of future business. Humanise yourself (are you a poor student buying a present for Father’s Day?), practice with a script and always show respect, said Richard Shell, a professor at the Wharton School of the University of Pennsylvania who teaches negotiation.

Be strategic about timing. Getting the best deal for a car might be easier at the end of the month instead of the beginning if the salesperson has to meet a monthly quota.

Haggling—an ancient practice among people in almost every culture—remains one of the best ways to save money. Take mattresses. Sixty percent of people who choose to haggle for a mattress succeeded—and saved a median of $245, according to a recent study by Consumer Reports.

Savvy shoppers such as Cameron Huddleston and her husband Alex Lebedinsky have been haggling for years, using a version of good cop, bad cop to score a deal.

When the Bowling Green, Ky., couple saw a $3,000 cream coloured sectional at a local home furnishing store, Lebedinsky said within earshot of the owner that it was nice but he didn’t want to spend that much money. Huddleston tried to “plead” her case (also so the owner would hear.) She said it was smart to invest in a high quality sofa that would last. But Lebedinsky wouldn’t budge.

Eventually, Huddleston asked the owner to help her out and the price came down quickly: $2,400.

“My husband is always my wingman when I buy furniture or anything expensive,” said Huddleston.

While it may not be possible to score a discount on everything (i.e. a grocery store clerk probably doesn’t have the authority to give you a better price on those eggs), it is viable in more places you would think, including big box stores that will often match a competitor’s advertised lower price.

“I tell people if they never hear no it means they haven’t been assertive enough,” said Linda Babcock, a professor at Carnegie Mellon University, who teaches negotiation.

Here are areas where you can haggle, rated on their return on haggling, or ROH. When it comes to haggling, there are only two questions to ask: How hard is this going to be and how much money can it save me? The ROH score is a number from one (it isn’t worth it) to 10 (you’re crazy not to try).

Each also has a degree of bargaining difficulty—beginner, intermediate and pro.

Hotels

ROH Score: 5 most of the time, 3 this summer (It doesn’t take much time, aside from possibly having to interact with the concierge desk. The savings may be slim, especially during peak summer season.)

Degree of difficulty: Beginner

You wake up early in the morning on your vacation for a quick run on the treadmill in the hotel gym, only to find it is closed for renovations. That letdown can provide an opening to save money on your getaway.

When checking out after your stay, examine the line items on your invoice. There is a decent chance you’ll spot a so-called resort fee, even if you’re not staying at a five-star, luxury resort. The fees are ostensibly meant to cover services and perks a resort may offer, such as wireless internet or cabanas by the pool, but are sometimes tacked on even at more run-of-the-mill hotels.

“We have seen this for a decade at some of the lowest-priced hotels,” says Lauren Wolfe, counsel at Travelers United, a consumer-advocacy group. These tacked-on charges aren’t always flagged as resort fees—at low-cost hotels, they are often labeled as “safe fees” for the use of the in-room safes.

These fees can add up: A January analysis of pricing at more than 100 U.S. hotels by personal-finance website NerdWallet found that the average resort fee was more than $42 per night, or about 11% of the nightly cost for a room at a hotel that charges such a fee.

But travellers don’t need to stomach such nickel-and-diming. Yes, you can ask hotel operators to remove these fees from your bill.

If a resort fee wasn’t advertised as part of the room rate at the time of booking, Wolfe suggests negotiating with the concierge during checkout to have the added charge removed. Be firm and polite, she says.

If the resort fee is tied to specific amenities—such as a gym or pool—and those were inaccessible during your stay, use that as a bargaining chip. Play nice, and know that your attempt to get the fee scrapped may not succeed. “Don’t get in a fight with the person working at the front desk—that person did not set the policy,” Wolfe warns.

There are other ways to get a deal on a hotel stay. Before you book your vacation, try to negotiate a lower daily rate for a hotel room.

Start off by researching the prices for hotels in your destination across a variety of online travel agencies, and then compare those rates to the ones on the hotels’ own websites. Once you identify a hotel you wish to stay at, you’re going to have to pick up the phone.

Ask the representative for their best available rate, and see if they can match the rates offered by other nearby properties. Travellers may find more success with smaller, boutique resorts than with larger properties. Also ask if they have discounts for members of programs like AAA or AARP.

If the representative can’t offer you a discount, the hotel may be able to offer free parking or complimentary meal vouchers for breakfast at the hotel’s restaurant, says Jamie Larounis, a travel industry analyst with loyalty and rewards website UpgradedPoints.com.

Then at check in, be sure to ask if there are any upgrades available. These may come at a higher price, so have a sense of what the room rates are at the hotel to know if you’re getting a deal or not. If you know that the property isn’t sold out, there may be bargaining room.

Cars

ROH Score: 8 (Salespeople expect you to negotiate so if you do your homework, you can save thousands.)

Degree of difficulty: Intermediate

Preparing to haggle over a car purchase is enough to make your palms sweat and stomach turn. It also presents an opportunity to cut a deal on one of the most expensive purchases you’ll likely ever make.

Jay Austin is accustomed to negotiating as a former vice president in supply chain for a chemical company. Still, he used to dread trudging into a dealership to buy a car a decade ago.

“Let’s get our game face on,” the Medina, Ohio, resident would say to his wife as they rehearsed how they’d respond to different dealer tactics.

The state of haggling in the auto industry looks much different now. Shoppers can lay most of the deal-making groundwork even before coming face-to-face with a salesperson, comparing vehicle prices online and pitting offers against each other.

When Austin decided to sell his Lincoln MKC a couple of years ago, he surveyed online car retailers like Carvana and got $5,000 more than what his dealer offered him.

While there is more information at shoppers’ fingertips now, the car market is trickier to navigate. An inventory crunch sent vehicle prices flying, and buyers routinely paid hundreds of dollars over listed prices last year, according to Edmunds, a car-buying research firm. Pre pandemic, the average transaction price for a set of wheels was typically $2,000 or more below sticker price.

Still, haggling isn’t out of the question. One of the keys to having the upper hand now is to be flexible in what type of vehicle you’re willing to buy, say dealers and car brokers. If you’re hoping to get an “Arctic White” Corvette, and won’t settle for any other colour, be prepared to wait, and pay more.

Dealers have strategies to keep the customer paying a premium. For example, it isn’t wise to immediately tell a dealer you’re planning on trading in your vehicle. They can lowball you on its value, a practice called “stealing the trade,” said Earl Stewart, who owns a Toyota dealership in Florida. When you finalise the terms of your sale, you can alert the dealer that you would actually like to trade in for another vehicle, he said.

When shopping around for different offers, you can even go incognito by using a fake email or phone number, Stewart said. This will keep incessant follow-up calls from salespeople at bay.

Most of all, keep your cool if you’re trying to negotiate the price of a car down, he said.

“One of the mistakes that people make is they show up to the dealership kind of with the boxing gloves on ready to go to battle,” said Tom McParland, who runs a consulting business where he assists customers with the car-buying process. If you start acting rudely to a salesperson, you can probably kiss a good bargain goodbye.

Some buyers got creative during the pandemic in their pursuit of a deal, including flying across the country to snag a reasonably priced set of wheels. One buyer even created a haggling tipsheet, including a last-ditch measure: bring your grandma to the dealership to cry.

Home mortgages

ROH Score: 7 (It can feel awkward to ask a zillion questions to parse the terms of a mortgage loan, but you could score tens of thousands of dollars in savings over decades by landing a lower rate.)

Degree of difficulty: Intermediate

If you’re shopping for something complex, say a mortgage, beware of the human tendency to go on autopilot and accept the first price you’re offered, said Samantha Lamas, senior behavioural researcher at fund-research firm Morningstar.

Lenders may be counting on you to choose the easiest route because you feel overwhelmed, she said.

But here’s a reminder: Shopping around is haggling and pays off.

Borrowers who applied with two different lenders reduced their mortgage rate by an average of 0.10 percentage point, according to research from Freddie Mac that examined purchases between 2010 and 2021.

Take a $450,000 home price where the buyer puts 20% down and is looking at current mortgage rates ranging from 6.5% to about 7.5%. Over 30 years, the difference between 6.5% and 7.5% could add up to roughly $87,000 savings in interest, said Ted Rossman, a consumer-spending analyst at Bankrate.

Lenders are far more willing to work with borrowers these days. For one, they aren’t as busy as they used to be. Mortgage underwriting has slowed to a crawl in recent months as rates are keeping many prospective home buyers on the sidelines.

There are some guidelines. Don’t take a lenders’ first offer. Instead, compare offers from three to five lenders including a credit union, financial advisers say. Don’t let misconceptions or technical financial language hold you back either.

Doing this homework puts you ahead in seeking a loan. Most mortgage shoppers don’t bother to ask around for a lower rate, studies show.

It is also important to understand how mortgage inquiries affect your credit score. Lenders pull borrower’s credit reports, or make what’s called hard inquiries, before they decide if they’ll give you a mortgage. A hard inquiry usually dings your credit score by a few points, said Aniva Hinduja, general manager of home and mortgage at Credit Karma. All mortgage credit inquiries within a 45-day window count as one inquiry so, shop within this period to minimise how much your score will fall, said Bill Banfield, executive vice president of capital markets for Rocket Mortgage.

Once you compare terms such as the loan’s annual percentage rate and monthly mortgage payment, narrow down your list of possible lenders to two or three. Feel free to play one lender against another as you decide which loan is ultimately best for your financial situation.

Cellphone and internet

ROH SCORE: 5 (It is just a few phone calls, but also just a few hundred dollars a year in savings, most likely.)

Degree of difficulty: Beginner

The end of your wireless or internet bill contract means you’re free to change providers. It also means you’re ripe with fresh haggling power.

Companies may be more willing to dish out their best offerings to convince you to stick around.

Start by familiarising yourself with your plan. Salespeople often sell the priciest option, so there is a chance you’re already paying for a bunch of features you don’t need. You should also know competing service providers’ plan offerings, even if you want to stick with your current provider.

Now for the hard part: Picking up the phone. Don’t waste your time chatting with the general customer-service line. Ask to speak to the retention department (where trained specialists are better prepared to get you a sweeter deal) and mention that you’re thinking of switching providers.

“It’s the threat of canceling the service that gets us the most amount of money,” says Brian Keaney, chief operating officer at Billshark, a company that helps customers negotiate monthly bills.

Pat yourself on the back for making it this far, because it should get easier from here—you shouldn’t have to say much more. Industry executives suggest you say that you want to pay as little as possible, ask what they can do for you and listen. If they give you an offer, politely ask if there is more they can do.

Heads up: Wireless carriers won’t change the price of your plan. But! They could upgrade you to a better one—potentially one that isn’t advertised—or shave off pesky add-ons you don’t want. Even if you have a bare-bones plan, they could still give you loyalty credits to bring the cost down for a while.

If you do get one of those credits, check your bill and make sure it gets added. It can take two to three billing cycles to show up on your statement, Keaney said. Find out if your new plan or credit runs for a limited amount of time, like a year or two. If so, mark your calendar so you know to renegotiate the deal before the price increases again.

Some executives recommend mentioning life events such as a birth or job loss to unlock certain discounts if true, but only toward the end of the call after you’ve gained other offerings. Otherwise, the representative may be inclined to only give discounts that help in the short-term.

If you feel like you’re not getting anywhere with the representative you’re speaking to, politely let them know that you’ll call back later. (You can scream into the void after you hang up.) Every representative is different and you could get matched with someone who is more willing to help you out next time. Be patient, pick up the phone and repeat the previous steps.

Medical bills

ROH Score: 8 (It is a massive headache to negotiate payments when you’re dealing with a health crisis, but lower cost of treatments can save you thousands.)

Degree of difficulty: Pro

In 2010, Amanda Grossman was speechless when a receptionist requested a higher-than-expected $75 dental copay. She didn’t yell or scream. The shock and confused look on her face must have said it all. Seconds later, the receptionist said $50 would be acceptable.

“I thought, ‘Oh My Gosh. There’s wiggle room,’” says Grossman, 40, a certified financial education instructor.

Now emboldened, Grossman regularly questions medical charges, requests discounts and cheaper prescriptions. To her surprise and relief, she discovered that doctors who don’t accept her health insurance are sometimes willing to lower costs.

For example, her son sees a specialist who doesn’t accept the family’s health insurance. Grossman asked if the specialist would lower the per-visit cost, which the specialist did—to $150 from $200. Then, Grossman submitted a claim to her insurance company, which covered $97 for each $150 visit.

It also helps, she says, to ask for itemised bills to spot potential overcharges or errors. She recalls going to the hospital on a pregnancy-related visit seven years ago and seeing a $200 copay charge on her itemised bill for the emergency room, even though she never went to the emergency room. The charge was dropped after she called.

Nearly half of adults who received a medical or dental bill that they thought contained an error successfully resolved the disputed bill with their medical care provider or insurer, according to a 2022 healthcare debt survey from the Kaiser Family Foundation, a nonprofit organisation that focuses on health care issues.

With a few questions, prescription costs can be reduced or avoided as well.

Grossman’s husband, Paul Peacock, was prescribed a $400 medication from his dermatologist. She suggested he call his doctor, say $400 was too much for them, and ask if there was a cheaper alternative. He did and there was. His new prescription costs $168.

Grossman isn’t afraid to ask for price breaks in other parts of their lives as well. When the couple needed the HVAC replaced, the contractor handed them a bill for $7,600.

“Is there anything else you can do for us?” she asked. He gave one glance to his partner, she recalls, and responded “How about if we lop off $400?”

“Yes, let’s do that,” she responded.

LONDON—When the U.K. voted to leave the European Union in 2016, many backers of Brexit hoped the move would cut immigration by ending the right of EU residents to move here freely, a growing trend that some Britons felt was taking jobs away from locals.

Instead, immigration has risen to a record high, as growing numbers of migrants from non-European countries have outstripped a sharp decline in those from the EU. Though the ruling Conservative Party has repeatedly pledged to cut migrant numbers post-Brexit, it has instead let in more in a bid to boost stagnant economic growth.

Data released on Thursday by the Office for National Statistics showed that net migration during 2022 rose by 606,000, the largest increase on record. The figures don’t include migrants who arrived illegally on boats across the English Channel, the number of whom surged 60% last year to a record of about 45,000.

“Numbers are too high, it’s as simple as that, and I want to bring them down,” Prime Minister Rishi Sunak said Thursday.

The U.K. experience illustrates that even if industrialised nations want to curb migration, and take drastic steps to do so, they can come under pressure to allow it to avoid economic damage from labor shortages. In the U.K., the labor force is now smaller than it was pre pandemic, and some industries have complained they can’t find enough workers.

It also underscores the political headache this trade-off presents. Thursday’s immigration numbers elicited criticism among some Conservative Party lawmakers, who said voters wanted this influx brought down. Sunak’s government announced new restrictions this week on how many family members visa-holding students could bring to the country. Polls show that Britons have mixed views on whether migrants are a boon or not, but they put a lot of weight on whether the government is seen to be controlling the flow of people into Britain.

Contributing to the rise was the granting of humanitarian visas to some 300,000 people from Ukraine following the Russian invasion and from Hong Kong amid growing political repression in the former British colony. But it was also fuelled by a sharp rise in visas for students and workers from non-EU countries. About 136,000 visas were granted to students’ families in 2022, an eightfold increase from 2019.

Most economists agreed that Brexit would liberalise trade with the rest of the world but raise trade barriers with the EU, Britain’s largest trade partner, and that the net economic effect would be negative. Most economists also expected that greater migration from the rest of the world wouldn’t be enough to compensate for the decline in European migrants, another net negative, said Jonathan Portes, an economist at King’s College London who tracks immigration.

“We were right about the first part and wrong about the second,” he said. “We were right about the basic economics, but a policy that what we thought would be a modest liberalisation [of migration with the rest of the world] has turned out to be de facto quite a significant liberalisation” he said.

Whether the increase in numbers is part of a longer-term trend is still too early to tell, said Madeleine Sumption, the director of the Migration Observatory at the University of Oxford. Many of the students who have arrived in the U.K. will eventually leave and there will likely be less migration from Ukraine and Hong Kong in coming years. That could push down the numbers toward the longer-term average of about 200,000 to 250,000 a year.

Before Brexit, any EU national had the right to settle and work in the U.K. During the referendum, the “Leave” campaign said the U.K. should have more control over who entered the country. After voting to quit the EU, the U.K. government in 2021 introduced a new immigration system that only allowed in people who met certain criteria—such as being paid 26,200 pounds a year, equivalent to $32,400, or having certain levels of qualifications. This system was aimed at avoiding a glut of low-paid workers into the U.K., which had fueled the backlash against immigration, while encouraging companies to invest more in their workforces and increase pay.

In 2022, total long-term immigration, measured as anyone who stays for longer than a year, was estimated at around 1.2 million. Of that total, 925,000 were from non-EU nations.

Even now, as the government has allowed more visas for higher-skilled jobs from doctors to bankers, it has tried to resist letting in lower-skilled workers.

“What they’re not willing to do, by and large, is open up to low-wage jobs, which previously had been done by EU workers,” said Brian Bell, chair of the U.K.’s Migration Advisory Committee, which advises the government. It also meant that EU workers no longer got preferential access to the U.K., vastly increasing the influx from countries such as India.

This new system, however, was implemented just as a worker shortage and high inflation started to take hold during the pandemic. The U.K. is the only major Western economy whose workforce is still smaller than it was pre pandemic, due to a combination of long-term illness, lower immigration from Europe and people taking early retirement. The Bank of England said those shortages have stoked inflation as companies have been forced to increase wages to attract workers, while other companies simply can’t grow because they can’t find enough workers.

What is clear is that illegal migration has an impact on public opinion. The U.K. government has focused on stopping illegal migration, largely in the form of small-boat crossings from France. Sunak has repeatedly pledged to clamp down on this and has signed a deal with France to help bust smuggling rings. The government is also threatening to deport migrants who arrive illegally to the African country of Rwanda. This policy has so far been blocked by the courts.

LONDON—Fresh out of an energy crisis, Europeans are facing a food-price explosion that is changing diets and forcing consumers across the region to tighten their belts—literally.

This is happening even though inflation as a whole is falling thanks to lower energy prices, presenting a new policy challenge for governments that deployed billions in aid last year to keep businesses and households afloat through the worst energy crisis in decades.

New data on Wednesday showed inflation in the U.K. fell sharply in April as energy prices cooled, following a similar pattern around Europe and in the U.S. But food prices were 19.3% higher than a year earlier.

The continued surge in food prices has caught central bankers off guard and pressured governments that are still reeling from the cost of last year’s emergency support to come to the rescue. And it is pressuring household budgets that are also under strain from rising borrowing costs.

In France, households have cut their food purchases by more than 10% since the invasion of Ukraine, while their purchases of energy have fallen by 4.8%.

In Germany, sales of food fell 1.1% in March from the previous month, and were down 10.3% from a year earlier, the largest drop since records began in 1994. According to the Federal Information Centre for Agriculture, meat consumption was lower in 2022 than at any time since records began in 1989, although it said that might partly reflect a continuing shift toward more plant-based diets.

Food retailers’ profit margins have contracted because they can’t pass on the entire price increases from their suppliers to their customers. Markus Mosa, chief executive of the Edeka supermarket chain, told German media that the company had stopped ordering products from several large suppliers because of rocketing prices.

A survey by the U.K.’s statistics agency earlier this month found that almost three-fifths of the poorest 20% of households were cutting back on food purchases.

“This is an access problem,” said Ludovic Subran, chief economist at insurer Allianz, who previously worked at the United Nations World Food Program. “Total food production has not plummeted. This is an entitlement crisis.”

Food accounts for a much larger share of consumer spending than energy, so a smaller rise in prices has a greater impact on budgets. The U.K.’s Resolution Foundation estimates that by the summer, the cumulative rise in food bills since 2020 will have amounted to 28 billion pounds, equivalent to $34.76 billion, outstripping the rise in energy bills, estimated at £25 billion.

“The cost of living crisis isn’t ending, it is just entering a new phase,” Torsten Bell, the research group’s chief executive, wrote in a recent report.

Food isn’t the only driver of inflation. In the U.K., the core rate of inflation—which excludes food and energy—rose to 6.8% in April from 6.2% in March, its highest level since 1992. Core inflation was close to its record high in the eurozone during the same month.

Still, Bank of England Gov. Andrew Bailey told lawmakers Tuesday that food prices now constitute a “fourth shock” to inflation after the bottlenecks that jammed supply chains during the Covid-19 pandemic, the rise in energy prices that accompanied Russia’s invasion of Ukraine, and surprisingly tight labor markets.

Europe’s governments spent heavily on supporting households as energy prices soared. Now they have less room to borrow given the surge in debt since the pandemic struck in 2020.

Some governments—including those of Italy, Spain and Portugal—have cut sales taxes on food products to ease the burden on consumers. Others are leaning on food retailers to keep their prices in check. In March, the French government negotiated an agreement with leading retailers to refrain from price rises if it is possible to do so.

Retailers have also come under scrutiny in Ireland and a number of other European countries. In the U.K., lawmakers have launched an investigation into the entire food supply chain “from farm to fork.”

“Yesterday I had the food producers into Downing Street, and we’ve also been talking to the supermarkets, to the farmers, looking at every element of the supply chain and what we can do to pass on some of the reduction in costs that are coming through to consumers as fast as possible,” U.K. Treasury Chief Jeremy Hunt said during The Wall Street Journal’s CEO Council Summit in London.

The government’s Competition and Markets Authority last week said it would take a closer look at retailers.

“Given ongoing concerns about high prices, we are stepping up our work in the grocery sector to help ensure competition is working well,” said Sarah Cardell, who heads the CMA.

Some economists expect that added scrutiny to yield concrete results, assuming retailers won’t want to tarnish their image and will lean on their suppliers to keep prices down.

“With supermarkets now more heavily under the political spotlight, we think it more likely that price momentum in the food basket slows,” said Sanjay Raja, an economist at Deutsche Bank.

It isn’t entirely clear why food prices have risen so fast for so long. In world commodity markets, which set the prices received by farmers, food prices have been falling since April 2022. But raw commodity costs are just one part of the final price. Consumers are also paying for processing, packaging, transport and distribution, and the size of the gap between the farm and the dining table is unusually wide.

The BOE’s Bailey thinks one reason for the bank having misjudged food prices is that food producers entered into longer-term but relatively expensive contracts with fertilizer, energy and other suppliers around the time of Russia’s invasion of Ukraine in their eagerness to guarantee availability at a time of uncertainty.

But as the pressures being placed on retailers suggest, some policy makers suspect that an increase in profit margins may also have played a role. Speaking to lawmakers, Bailey was wary of placing any blame on food suppliers.

“It’s a story about rebuilding margins that were squeezed in the early part of last year,” he said.

Can certain personality traits explain investors’ risk tolerance and investment decisions?

A forthcoming paper suggests it might. Specifically, the authors found that two personality traits—neuroticism and openness—significantly affect how investors perceive the economy, financial markets and their likelihood to buy stocks or stock funds, with those who are less neurotic and more open tending to have a higher allocation to equities.

While the authors primarily studied investors in the U.S., they also identified similar patterns among investors in Germany, Australia and China.

The Wall Street Journal spoke with two of the paper’s co-authors, Hongjun Yan, a professor of finance at DePaul University’s Driehaus College of Business, and Cameron Peng, an assistant professor of finance at the London School of Economics, about their findings. Zhengyang Jiang, an associate professor of finance at Northwestern University’s Kellogg School of Management, is the paper’s other co-author.

Here are edited excerpts of the conversation.

WSJ: How can psychology theories help to explain investor behaviour?

YAN: Investors often have very different portfolios. Traditionally, economists focus on risk aversion and market expectations, but in this paper we argue that well-known personality traits—extroversion, agreeableness, openness, conscientiousness and neuroticism—provide a new dimension to explain investors’ choices.

In the Winnie-the-Pooh stories, Tigger is always excited and optimistic while Eeyore is always down and pessimistic. You might expect their investment portfolios to look very different and reflect their overall outlook.

WSJ:How did you study this topic?

PENG: We collaborated with the American Association of Individual Investors, administering a survey to over 3,000 of its members. We collected information on their personality traits, market expectations, and investment decisions. The AAII sample is predominantly wealthy, white, older men. And when they make investment decisions, they are usually quite big, involving hundreds of thousands or even millions of dollars. Their actions can have a real impact on the market.

WSJ:What did you find?

YAN: We found that neuroticism and openness are correlated with investors’ beliefs about the market and their likelihood to buy equities. We were surprised that agreeableness wasn’t important when it comes to investment beliefs or decisions since other researchers have found that agreeableness tends to be correlated with other economic outcomes, like success in negotiating wages.

WSJ: How does neuroticism affect investors’ decisions?

YAN: Someone who is more neurotic has a very different outlook than someone who is not in terms of stock-market expectation. For example, an investor ranking in the middle of the [neurotic] scale might expect an annual stock-market premium of about 6%. But investors at the top of the scale are likely to only expect a 4% stock-market premium, while investors at the bottom of the neuroticism scale are likely to expect an 8% stock-market premium.

PENG: Neuroticism also affected how respondents invested their money in their actual accounts. More neurotic investors were less likely to own equities. Very neurotic investors invested about 56% of their portfolio in equities, while investors who weren’t neurotic invested about 64% of their portfolio in equities.

WSJ:How does openness affect investors’ decisions?

PENG: Investors ranking high for openness were more likely to entertain the possibility of extreme events, like a market crash or a run—really any scenario when the market goes up or down by more than 20%.

Investors who were very open were somewhat more likely to take risks by buying equities. Specifically, investors who were the most open were 3 percentage points more likely to own more equities than investors who weren’t. They had about 62% of their portfolio in equities, while investors who were less open had about 59% of their portfolio in equities.

WSJ: What did you find when you looked at data from other countries?

YAN: We find that neuroticism and openness affect market perceptions and decisions fairly consistently across different data sets. That’s quite remarkable considering the culture and investing environment in each country is very different.

WSJ:What are the study’s implications?

YAN: Personality traits may shape investors’ decisions in ways that many economists have yet to seriously consider. Our research, for instance, also suggests more extroverted and more neurotic investors’ investment choices could be highly influenced by social interactions, or what their friends or colleagues are doing. That insight goes beyond economists’ traditional framework, which focuses on risk tolerance and market expectations, and could help researchers better explain investor behaviour.

PENG: Large asset-management firms or financial planners could spend time getting to know their clients’ personalities and use those insights when they make investment recommendations. Maybe they could encourage investors who tend to be neurotic to be a little less pessimistic.