Ambiguity Tolerance Beats Artificial Intelligence
This article intends to demystify the use of artificial intelligence in asset management. Readers will learn how to embed AI in their professional investment decision architecture, by managing their own ambiguity tolerance. Presented insights are illustrated with examples.
As independent applied behavioural finance experts, our consulting and training empowers professional investors to make more rational investment decisions within an aligned choice architecture.
In recent years we have increasingly experienced the need to conduct primary research on asset allocation phenomena ourselves, as the financial literature was still occupied with dogmatic shadowboxing on active/passive, efficient/irrational, alpha/beta or smart/dumb beta. Our research empowers us and our clients to better distinguish between relevant signals and inconsequential noise of new asset allocation-related insights, as shown in our analyses for risk parity (here), smart beta (here), ethical/unethical asset allocation methodologies (here) or our ground-breaking research on measuring the global capital stock (here).
This article intends to contribute to a growing debate about using Artificial Intelligence (AI) in investment management by demystifying what AI can and cannot do for a professional investment process. It is a sequel to our article on how to establish High Performance Investment Teams © in early 2016.