Factors influencing investment decision-making before and after an informative Emotional Intelligence Intervention
Master Thesis
2018
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University of Cape Town
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A significant body of research exists in psychology pertaining to the various biases which influence human decision-making. A growing body of knowledge on the understanding of decision-making in an investment setting has been established over the last 30 or so years. The objective of this study is to understand the factors influencing investment decision-making, before and after an emotional intelligence intervention. This study places the focus on the most common cognitive psychological biases which may affect investment decisionmaking, by establishing these biases in behavioural finance under the theoretical literature review. The research is scoped in the form of a case study. Two survey questionnaires were deployed on a sample of investment professionals within the vicinity of the city of Cape Town. The questionnaires seek to establish whether participants exhibit common cognitive psychological biases by phrasing questions in both investment and non-investment scenarios. On completion of the first questionnaire, each participant read an informative article on the subject of emotional intelligence and the development thereof before proceeding to the second questionnaire. The objective of this article is to make participants aware of, and create an understanding of emotional intelligence and the development thereof. The results of both questionnaires were analysed to establish whether participants exhibit any change in their responses. The analysis confirmed varied results for the biases considered. Whilst participants appeared to exhibit higher prevalence of availability and anchoring bias post the emotional intelligence intervention, participants exhibited lower indications of herding, self-control & mental accounting bias post the emotional intelligence intervention. Participants appeared equally loss-averse in both questionnaires. Therefore, in summary, the results show that, at least to some extent, the participants exhibited the biases considered, and after the introduction of the construct of emotional intelligence and the development thereof, a change in most of the responses were noted. By design, the scope of this study and the sample size observed does not make it possible to extrapolate these results beyond the sample group. However, the results positively demonstrate a solid basis for future research on the measured impact of an emotional intelligence intervention on investment professionals and the role of emotional intelligence and consequent bearing thereof on investment decision-making.
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Lewis, A. 2018. Factors influencing investment decision-making before and after an informative Emotional Intelligence Intervention. University of Cape Town.