The choice of architecture

Q4.

You often speak about “choice architecture” - designing environments that make better decisions more likely. What might that look like in the context of investing?

The idea of choice architecture stems from Kurt Lewin’s insight that behaviour depends both on the person and their environment. Later, Richard Thaler and Cass Sunstein showed that people never make decisions in a vacuum: the way options are presented always shapes outcomes. In other words, every decision environment has an architecture, whether designed intentionally or not. In finance, good choice architecture helps investors make clearer, more consistent decisions. Examples include:

Temporal structure: Separating long-term allocation reviews from short-term liquidity decisions.
Information framing: Showing performance against long-term goals, not daily market noise.
Decision protocols: Agreeing in advance which signals merit action and which are distractions.
Comparison frameworks: Benchmarking against relevant peers or personal targets, not broad indices.
Scenario planning: Testing “what-if” outcomes in calm times to prepare for volatile ones. The aim is not to limit autonomy, but to design contexts where long-term values and short-term choices align more naturally. These principles extend to family governance and group decision-making contexts, domains we explored in our Harvard Business Review article on strategies for better group decisions.

Q5.

How can behavioural insights help investors manage information overload and avoid reacting to noise?

Investors today face more information than ever, and much of it is distracting rather than useful. Research, including Kahneman, Sunstein and Sibony’s work on noise, shows that too much information increases variability in judgement and can reduce decision quality. Part of the challenge is our natural desire to create explanations. When markets move, we look for stories to make sense of it, even when those stories have little predictive value.

Philip Tetlock’s research on forecasting demonstrates that even experts struggle to predict outcomes reliably, despite confident narratives. Behavioural insights suggest several practical approaches.

First, distinguish signals from background commentary: a signal is only something that changes your underlying investment thesis or personal circumstances.

Second, reduce the frequency of portfolio monitoring; less exposure to short-term volatility helps maintain long-term discipline.

Third, use predefined decision rules so that action is triggered by clear criteria rather than emotion.

Finally, involve a trusted advisor or counterpart who can challenge assumptions and add constructive friction to the decision process. In short, the goal is not to eliminate information, but to structure how and when we engage with it so that long-term objectives remain the focus.

Q6.

How does a clear decision framework help investors maintain discipline under emotional or noisy market conditions?

The connection between frameworks and discipline is often misunderstood. Discipline is not mainly about willpower. Research on self-control shows that people who appear disciplined usually face fewer tempting decisions in the first place because they have structured their environments to support good choices. This is directly relevant for investing. A framework does not predict markets; it shapes how decisions are made. Its value lies in providing clarity and consistency amidst complexity. To be effective, it must be practical: specific enough to guide actions, yet flexible enough to adapt across conditions. For example, an investor might commit to rebalancing only when allocations move beyond a defined range, or to reviewing strategy on a set schedule rather than reacting to market movements. In this way, discipline becomes less about resisting impulses and more about designing decision processes that make long-term alignment the easier default.