Behavioural Aspects of Institutional Investment Decision-Making
- Start date: 15 January 2018
- End date: 30 April 2019
- Principal investigator: Dr Iain Clacher
Funded by the Institute and Faculty of Actuaries (IFoA) Actuarial Research Centre (ARC).
The aim of this research project is to explore the decision-making of institutional investors, in particular insurers and pension schemes, and the biases that may affect their investment decisions. This may include, but not be limited to, emotional, psychological and political biases. It is expected that the project will first explore what "rational" or “optimal” behaviour could be expected from an institution in certain economic scenarios, based on its investment objectives and underlying values.
It will then explore whether there is solid evidence that “behavioural” factors, such as human psychology, company culture, corporate politics and conflicts of interest, cause them to deviate from optimal behaviour. The research will then make practical conclusions that could be used by actuaries working in investment and related areas. For example, one possible output of the research could be a suggested governance structure an organisation could put in place to manage these biases and conflicts.
To find out further information, visit the project webpage. You can also read this blog post by De Leonardo Cohen giving an overview of the project.