Challenging investment decision-making in pension funds

Carl-Christian Trönnberg (Department of Psychology, Gothenburg University, Goteborg, Sweden)
Sven Hemlin (Gothenburg Research Institute, Gothenburg University, Goteborg, Sweden)

Qualitative Research in Financial Markets

ISSN: 1755-4179

Publication date: 10 May 2019



The purpose of this study was to gain a better understanding of pension fund managers investment thinking when confronted with challenging investment decisions. The study focuses on the theoretical question of how dual thinking processes in experts’ investment decision-making emerge. This question has attracted interest in economic psychology but has not yet been answered. Here, it is explored in the context of pension funds.


The sample included 22 pension fund managers. The authors explored their decision-making by applying the critical incident interview technique, which entailed collecting investment decisions that fund managers retrieved from recent memory (Flanagan, 1954). Questions concerned the investment situation, the decision-making process and the challenges and uncertainties the fund managers faced.


Many of the 61 critical incidents examined concerned challenging (mostly stock) investments based on extensive analysis (e.g. reliance on external analysts for advice; analysis of massive amounts of hard company and stock market information; scrutiny of company reports and personal meetings with CEOs). However, fund managers to a high degree based their decisions on soft information judgments such as experience and qualitative judgements of teams. The authors found heuristics, intuitive thinking, biases (sunk cost effects) and social influences in investment decision-making.

Research limitations/implications

The sample is small and not randomly selected.

Practical implications

The authors suggest anti-bias training and better acquaintance with human forecasting limitations for pension fund managers.


Pension fund managers’ investment thinking has not previously been investigated. The authors show the types of investment situations in which analytical and intuitive thinking and biases occur.



Trönnberg, C. and Hemlin, S. (2019), "Challenging investment decision-making in pension funds", Qualitative Research in Financial Markets, Vol. ahead-of-print No. ahead-of-print.

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