This study originated in the phenomenon that has been observed in the South African Saddle
Horse Industry of substantial investments being made over time in the absence of obvious
financial or economic reward. A literature study confirmed that, internationally, investment
without obvious financial and economic rewards is not unknown and at the same time it was
obvious that it is a rarely studied subject. From the literature study it was also evident that this
phenomenon occurs where passion and, to a lesser extent, commitment is involved. Economic
models on decision making is lacking in perspective on the influence of emotions which were
proven to be substantial in an emotionally-laden market, such as the South African Saddle Horse
industry.
Consumption theory in marketing describes consumption decisions where the consumer is so
influenced by emotions that rational influences barely come into play. It is in this context that the
study seeks to qualify the investment decisions in the South African Saddle Horse industry by the
adaption of consumption theory to investment theory. Research on the indicated strategic
phenomenon fits within the critical realism paradigm and is essentially inductive, theory building
research. In this case, the adaption of consumer theory as investment theory. Qualifying the
influence of emotions in the investment decision – the “why” and “how” questions about a
contemporary set of events, over which the researcher has no control – indicates case study as
the applicable method of research. In this research, the case study theory is built by generalising
case data to prior theory seeking replication or theoretical replication. With prior theory
embracing the mentioned consumer theory and case selection dictated by the information, a case
study can assist to identify the motivators of the investment decision.
Once qualified, the influence of emotions on the investment decision in the mentioned strategic
phenomenon can be quantified. Quantifying the influence of emotions on the investment
decision leaves two alternatives, the first of which is developing a data set in a statistical survey.
However, neuroeconomic findings indicate that opportunity cost comparisons for decisions are
supported by our emotional circuitry that is commonly below our conscious awareness. This
finding has the direct implication that opportunity cost questions in retrospect do not yield
reliable information. The second alternative would be to use dependable historic investment
decision data series, such as auction prices. But in the South African Saddle Horse industry, only
African Saddle Horse Futurity (ASF) offers any usable investment decision data series, with the
AACup being the mother competition in the USA, offering a compatible data series but much
more complete and evolved. Therefore, in quantifying the influence of emotions on investment
decisions, ASF data and extended AACup auction data is used in an Ordinary Least Squares
regression (OLS) analysis and for further calculations.
In the literature study it was evident that emotions will be a major influence in investment
decisions in the horse industry. This was confirmed by the multiple case study, proving
applicability of consumption theory to the investment decision in the South African Saddle Horse
industry. The OLS analysis rendered the magnitude of influence of emotions on the investment
decision as both prohibitive and irregular on the theoretical determinants of the investment
decisions. In all the research done, emotions were unanimously proven to be the determining
influence on the investment decision in the South African Saddle Horse industry.
But in a free market system where price equates demand and supply, the confirmed influence of
emotions in the establishment of price hampers the effective distribution of scarce production
resources. In this, the influence of emotions results in a cost to the industry. By manipulating the
data set used in the dissertation, an indication of the historic cost of the influence of emotions in
the investment decision at the ASF and AACup competitions became apparent.
Also, the influence of emotions can be equally crucial in, for example, exploiting economic growth
potential. For example, the Saddle Horse industry is a world-wide multimillion dollar industry,
with coincidently proven and strong connections with good growth potential to South Africa’s
rural areas. These connections contain sustainable development potential to improve the quality
of life for many people living in these rural areas. But in order to successfully exploit this
potential, more information on emotions as an economic variable is needed in stimulating the
industry.
In accordance with the incidence of emotions as an influence in decision making, evident in
literature and this research, this argument for more information is extendable to numerous other
emotionally influenced markets. Therefore, in order to improve reliability of predictions on
economic investment and also economic growth, emotions as an influence have to be accounted
for. / MSc (Agric), North-West University, Potchefstroom Campus, 2015
| Identifer | oai:union.ndltd.org:netd.ac.za/oai:union.ndltd.org:nwu/oai:dspace.nwu.ac.za:10394/15194 |
| Date | January 2014 |
| Creators | Dreyer, Johannes Hendrik |
| Source Sets | South African National ETD Portal |
| Language | English |
| Detected Language | English |
| Type | Thesis |
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