Unlike previous research that examines solely the direct effects of personality traits on investment behaviour, this study introduces a mechanism to investigate how individual investors’ personality traits, combined with their overconfidence and risk propensity, jointly influence investment behaviour. The data were collected from 392 individual investors registered with the Pakistan Stock Exchange through a survey. The purposive sampling technique was used to select individual investors. Structural equation modelling was employed for data analysis using SmartPLS 3.0 software. The findings showed that conscientiousness and extraversion are the strongest predictors of investors’ overconfidence, followed by openness to experience. Neuroticism was neither supported nor found to be significant regarding investors’ overconfidence. Furthermore, investors’ overconfidence has a positive influence on their risk propensity, which, in turn, exhibits a positive association with their investment behaviour. This study is one of the earliest attempts to apply the sequential mediation approach to investigate how overconfidence and risk propensity influence investment behaviour.
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