Page 10 - FundTech Spring 2019
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BEHAVIOURAL SCIENCE


















































                                     MODEL BEHAVIOUR






                         NICHOLAS PRATT LOOKS AT THE GROWING USE OF BEHAVIOUR SCIENCE IN THE FUNDS
                            INDUSTRY AND ITS POTENTIAL ROLE AS THE SAVIOUR OF ACTIVE MANAGEMENT.





                       ALTHOUGH IT COULD be argued   psychological research into economic   science at Oxford Risk, a research firm
                       that behavioural science has been   science, especially concerning human   providing investor risk profiling.
                       employed in the investment process   judgement and decision-making   When discussing behavioural science,
                       for decades, it first gained significant   under uncertainty”.   it is important to separate bias and
                       commercial attention in 2002 when   But while it has gained popularity in   emotion, he says. “We definitely want
                       the Nobel Prize for Economics went   the funds industry, it is by no means   to remove bias because it leads to an
                       to Israeli psychologist Daniel Kahneman,   pervasive or deployed systematically,   inaccurate assessment of the world,
                       “for having integrated insights from   says Greg Davies, head of behavioural   but we don’t want to remove emotion






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