This dissertation is about the searching for potential human biases in the Irish banking
sector. It tries to find out how individual decision makers deal with risk versus incentives in
their day to day decision making. It involves interviewing bankers in different areas and
listening to their views and perspectives. From the study of the researcher in human biases
we try find out is there possible scenario’s where there is less than optimal/rational
decisions being made and are these decision makers aware of these biases.
‘Human biases’ comes from the relatively new study of behavioural finance and is inspired
by the studies of Kahneman and Tversky in the 1970’s. It has come into mainstream thought
particularly over the last 5 years because of the global financial crisis of 2008. The Research
involves trying to find out the decision making process of particular actors within banking
and using the literature as a reference to investigate possible areas of perceived bias.
This study involved a lot of listening to the views of the interviewees and how they viewed
their roles within banks. How they handled perceived risk and how did this compare to
other risk takers i.e traders. We tried to keep an open view whilst interviewing as we didn’t
know the ins and outs of procedures. We tried to open their eyes to potential biases to see
were they aware of them, how did they judge them and did this fit with their ideas of
fulfilling their jobs.
We tried to bring all these together and see if there were any conclusions of this. Did
incentives overly affect rational thinking? Who was the most risk conscious? Did they
understand ‘group herd’ phenomenon? Had much changed since 2008? How did they
explain the bank failure? And what would they do different?
The researcher hopes that this study will bring more light on the day to day decision making
of the bank official. How they weigh up risk versus incentives. The difficulties that lie
beneath making these choices and how perceived prudent procedures might not work so
well in the world. And maybe this study will show how middle to lower bankers are not
really in a position to alter targets or the way in which a bank is being run. But before this
study started we did not know what results would throw up and that added to the
enjoyment of this research.