Behavioural issues in portfolio decision analysis

Barbara Fasolo, Alec Morton, Detlof Winterfeldt

Research output: Chapter in Book/Report/Conference proceedingChapter

6 Citations (Scopus)

Abstract

The aim of this chapter is to review some behavioural issues in portfolio choice and resource allocation decisions, with a focus on their relevance to Portfolio Decision Analysis. We survey some of behavioural literature on the most common heuristics and biases that arise in and can interfere with resource allocation processes. The common idea behind this behavioural literature is that of cognitive or motivational failure as an explanation for the violation of normative models. Then, we reflect on the relevance of this literature by drawing from the authors’ personal experiences as decision maker or decision analyst in real world resource allocation settings. We argue that justifiability can also be a reason for the normative violations. We conclude by discussing ways in which an analyst might approach debiasing.
LanguageEnglish
Title of host publicationPortfolio Decision Analysis
Subtitle of host publicationImproved Methods for Resource Allocation
EditorsAhti Salo, Jeffrey Keisler, Alec Morton
Place of Publication9781441999436
PublisherSpringer-Verlag
Pages149-165
Number of pages17
DOIs
Publication statusPublished - 2011

Fingerprint

Decision analysis
Resource allocation
Violations
Analysts
Portfolio choice
Heuristics and biases
Decision maker
Debiasing

Keywords

  • operations research
  • financial economics
  • management science
  • behavioural issues
  • portfolio decision analysis

Cite this

Fasolo, B., Morton, A., & Winterfeldt, D. (2011). Behavioural issues in portfolio decision analysis. In A. Salo, J. Keisler, & A. Morton (Eds.), Portfolio Decision Analysis: Improved Methods for Resource Allocation (pp. 149-165). 9781441999436: Springer-Verlag. https://doi.org/10.1007/978-1-4419-9943-6_7
Fasolo, Barbara ; Morton, Alec ; Winterfeldt, Detlof. / Behavioural issues in portfolio decision analysis. Portfolio Decision Analysis: Improved Methods for Resource Allocation. editor / Ahti Salo ; Jeffrey Keisler ; Alec Morton . 9781441999436 : Springer-Verlag, 2011. pp. 149-165
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Fasolo, B, Morton, A & Winterfeldt, D 2011, Behavioural issues in portfolio decision analysis. in A Salo, J Keisler & A Morton (eds), Portfolio Decision Analysis: Improved Methods for Resource Allocation. Springer-Verlag, 9781441999436, pp. 149-165. https://doi.org/10.1007/978-1-4419-9943-6_7

Behavioural issues in portfolio decision analysis. / Fasolo, Barbara; Morton, Alec; Winterfeldt, Detlof.

Portfolio Decision Analysis: Improved Methods for Resource Allocation. ed. / Ahti Salo; Jeffrey Keisler; Alec Morton . 9781441999436 : Springer-Verlag, 2011. p. 149-165.

Research output: Chapter in Book/Report/Conference proceedingChapter

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Fasolo B, Morton A, Winterfeldt D. Behavioural issues in portfolio decision analysis. In Salo A, Keisler J, Morton A, editors, Portfolio Decision Analysis: Improved Methods for Resource Allocation. 9781441999436: Springer-Verlag. 2011. p. 149-165 https://doi.org/10.1007/978-1-4419-9943-6_7