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On Tuesday 13th December, Expense Reduction Analysts hosted a networking lunch at he Atrium Building. The theme was the behavioural determinants of financial decision making and the speaker was Dr. Andreas Wismeijer, lecturer Tilburg University, visiting associate professor at Nyenrode Business University and entrepreneur.
In his talk, Dr. Wismeijer stressed the importance of having a better understanding of the determinants of behaviour to understand how we function in our professional role. Often, and especially in finance, there is a strong belief that the decisions we make are the result of a rational, analytical and conscious decision-making process. However, Dr. Wismeijer showed that the finance professional is first and foremost a human being, and hence a biological organism (brain) that reacts to an environment. This has important consequences and also certain limitations with regards to exactly how rational and unbiased the decisions we make can be. With several striking examples, Dr. Wismeijer showed that we simply cannot selectively switch parts of our brain off. Hence, each decision we make, either private or professional, entails the whole brain and is therefore influenced by our emotional state, personality, individual learning history and even our evolutionary history.
To better understand how we make financial decisions and how we can improve the decision-making processes, Dr. Wismeijer argued, we must first understand how we make decisions at all. Not as a professional, but as a person, as a living organism. And this is exactly what psychologists aim to unravel. Hence, no matter how mathematical and seemingly conscious-rational the professional decisions we make, psychology helps us to understand how we made them. Dr. Wismeijer therefore invited all those present to not only invest in gaining rational knowledge and technical tools, but also in gaining a better understanding of their own personality, emotions and motivations. After all, each professional decision begins with a human being making that decision.
Pictured left: Dr. Andreas Wismeijer, picture right: Frank van Opstal - Expense Reduction Analysts