Emotional economic man: Calculation and anxiety management in investment decision making

Richard Taffler, Crawford Spence, Arman Eshraghi

Research output: Contribution to journalArticlepeer-review

Abstract

Dominant theorisations of investment decision making remain firmly wedded to the notion of economic rationality either as a postulate of how financial actors actually behave or as a normative ideal to which financial actors should strive. However, such frameworks have been developed largely without engaging financial market participants themselves. Based on 51 indepth interviews with fund managers in various global financial centres, this article highlights a number of features of investment decision making that mainstream finance and behavioural approaches both fail adequately to describe. Drawing on psychoanalytic theory, it is shown how the inherent uncertainty of the investment process engenders a state of endemic anxiety among fund managers. This anxiety is managed via a range of mental defences, both conscious and unconscious. The importance fund managers place on meeting and putting trust in company management to ‘perform’ for them can equally be viewed as a means of alleviating anxiety rather than having any direct economic purpose. This article, furthermore, brings to light the crucial role that calculative techniques play in dealing with anxiety. Rather than
constituting a means of restoring rationality or correcting cognitive biases, calculation can actually re-enforce ego defences while simultaneously perpetuating the myth of homo economicus. Fund managers can be characterised as ‘doing’ but ‘not doing’ and ‘knowing’ but ‘choosing not to know’ and have to manage not only their clients’ funds, but their own personal anxiety as well.
Original languageEnglish
Article numberAOS-D-14-00297R6
Pages (from-to)53-67
JournalAccounting, Organizations and Society
Volume61
Early online date31 Jul 2017
DOIs
Publication statusPublished - Aug 2017

Keywords

  • calculative rationality
  • psychoanalysis
  • fund managers
  • defence mechanisms
  • group psychodynamics
  • trust

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