Judgments, forecasts and decisions: an analysis of fund managers over time

Decision theory is the study of models of judgement involved in, and leading to, deliberate and (usually) rational choice. In real estate investment there are normative models for the allocation of assets. These asset allocation models suggest an optimum allocation between the respective asset classes based on the investors’ judgements of performance and risk. Real estate is selected, as other assets, on the basis of some criteria, e.g. commonly its marginal contribution to the production of a mean variance efficient multi asset portfolio, subject to the investor’s objectives and capital rationing constraints. However, decisions are made relative to current expectations and current business constraints. Whilst a decision maker may believe in the required optimum exposure levels as dictated by an asset allocation model, the final decision may/will be influenced by factors outside the parameters of the mathematical model. This paper discusses investors' perceptions and attitudes toward real estate and highlights the important difference between theoretical exposure levels and pragmatic business considerations. It develops a model to identify “soft” parameters in decision making which will influence the optimal allocation for that asset class. This “soft” information may relate to behavioural issues such as the tendency to mirror competitors; a desire to meet weight of money objectives; a desire to retain the status quo and many other non-financial considerations. The paper aims to establish the place of property in multi asset portfolios in the UK and examine the asset allocation process in practice, with a view to understanding the decision making process and to look at investors’ perceptions based on an historic analysis of market expectation; a comparison with historic data and an analysis of actual performance.

The British Lower Palaeolithic of the early Middle Pleistocene

The archaeology of Britain during the early Middle Pleistocene (MIS 19–12) is represented by a number of key sites across eastern and southern England. These sites include Pakefield, Happisburgh 1, High Lodge, Warren Hill, Waverley Wood, Boxgrove, Kent's Cavern, and Westbury-sub-Mendip, alongside a ‘background scatter’ lithic record associated with the principal river systems (Bytham, pre-diversion Thames, and Solent) and raised beaches (Westbourne–Arundel). Hominin behaviour can be characterised in terms of: preferences for temperate or cool temperate climates and open/woodland mosaic habitats (indicated by mammalian fauna, mollusca, insects, and sediments); a biface-dominated material culture characterised by technological diversity, although with accompanying evidence for distinctive core and flake (Pakefield) and flake tool (High Lodge) assemblages; probable direct hunting-based subsistence strategies (with a focus upon large mammal fauna); and generally locally-focused spatial and landscape behaviours (principally indicated by raw material sources data), although with some evidence of dynamic, mobile and structured technological systems. The British data continues to support a ‘modified short chronology’ to the north of the Alps and the Pyrenees, with highly sporadic evidence for a hominin presence prior to 500–600 ka, although the ages of key assemblages are subject to ongoing debates regarding the chronology of the Bytham river terraces and the early Middle Pleistocene glaciations of East Anglia.