Beliefs interact with investors' biases and preferences to ultimately influence their behaviour. Two recent papers highlight the impact of individual investors' beliefs about the future and the impact on portfolio behaviour and composition, as well as market returns.
Relatively little is known about what greed is and does. These two papers highlight the importance of greed in economic behaviour, and to a greater chance of engaging in ethically questionable behaviour.
Culture explains much about how we think, feel, and behave. These two papers explore the influence of culture and cultural distance in a financial context.
These two papers provide a more sophisticated, behavioural understanding of time discounting, to enable more nuanced conversations with clients about current and future consumption, and help mitigate the potentially negative impacts of present bias.
These two research papers present insights into how advisers can better assess and guide how clients think about and structure goals - including savings goals.
Humans categorise and form stories about their world - including their financial lives. Two recent papers emphasise the implications of mental accounting, particularly for any investment professional in a client-facing role.
Two research papers exploring regret can help us improve how investment decision-making and outcomes are framed with clients and offer deeper insight into clients' personal and financial goals and priorities.
The endowment effect is the tendency for people who own a good to value it more than people who do not. Its economic impact is consequential. Two recent papers offer important and very useful insights for investment professionals.
The line between "error" and "reasonable human functioning" is remarkably vague. This Research Review focuses on a widely-cited paper that thoroughly unpacks the various concepts under the umbrella of confirmation bias.
Despite difficult times in recent years, momentum has been the factor that has generated the highest returns over the past 50 years. Three new papers on the topic take us into largely new territory and improve our understanding on how markets operate.
Memory is far from being a repository of neutral, reliable information and accounts of past events. This Research Review focuses on a seminal paper published in 1999 on "the seven sins of memory", and a recent 2019 paper on how memory errors impact investment decisions.
As ESG investing has leapt into the investment mainstream, it has become the focus of much academic research. Recent findings show that despite the many positive ramifications of ESG investing, it reduces the efficiency of markets and can introduce risk exposures in portfolios.
The funds management industry has spawned a lot of gurus. This research paper looks at whether market forecasters are any good at what they do.
The move to compulsory superannuation placed huge responsibility on individuals to manage their portfolios. A regular response is to educate people to a higher level of financial literacy.
Financial decisions are among the most important life-shaping decisions we make. Two recent research papers provide further evidence as to how practitioners can help improve clients' financial decisions.