Homework 3 Kloontykilla Castle Investment PDF

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Assignment focuses on the various behavioral patterns of the person who invested in his childhood dream of turning a castle into an attraction site . ...

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FIN 650 HW #3

The purpose of this assignment is to analyze behavioral biases of an investor from TV show Grand Designs. This particular episode is available on Netflix (Season 12, episode 1) and also available for free on Daily Motion: https://www.dailymotion.com/video/x6h8iyg. I mentioned in the lecture that if you have another show in mind that features an investment by an inexperienced person, perhaps one that doesn’t go quite as planned, you can use something else also for this homework. This show is about 45 minutes long. It might make sense to answer the questions below as you watch it. You also should have viewed all lecture material in Module III, lessons 2-8, before attempting this assignment.

1. What is the investment? If you choose something different from the Cloontykilla Castle, give a description of the project/business here. Budget? Timeline? Also, post a link to the video. After watching the Cloontykilla Castle documentary, the investment involved in this episode was the construction of a theatrical themed castle. The castle invested by famous actor Sean Simons was built on a historical site that was centuries old. The sole purpose of this investment was to ultimately create this reconstructed castle into a kind of “staycation” facility. The description of the project here was to not only restore its former glory but to give guests that nostalgic feeling that dates back over 8 centuries. The sole purpose of this project was to be available for guests to rent out and host events such as weddings, parties, or getaways. The budget for reconstructing this piece of history would cost about $100,000 which was laid out in 2007 and would be set to complete in 2021 which is hopefully next year!

2. Who is the investor? Describe their personality with some adjectives. “I’m angry for my country.” – The man behind this project, Sean Simons who is determined to fulfill his childhood dream would do no matter what it takes to get this castle complete despite going through some financial difficulties. He seems like a single-minded visionary who worked hard in his acting career and saved money to achieve his vision by converting this castle to provide a captivating experience for guests. The primary experience for guests includes getting to know the historical aspect of their homeland.

FIN 650 HW #3

3. List behavioral biases we have learnt in class that you identify in the investor. Give a short description for each behavioral bias and how it specifically shows up in this investor and/or their project. For Sean Simons one of the typical behaviors that can identify this investor involves the “mental accounting” which is the process in which investors categorize and mentally frame assets to belong in “future income.” In this case we know Sean Simons used his money from his past (acting career) to build the castle for potential future income. Another behavioral bias that can be used to identify Sean Simons involves the conservatism bias which describes investors who cling to their prior views or forecasts at the expense of acknowledging new information. In this case we can say Sean Simon wanted to restore old memories of the castle and turning it into an attraction to the public.

To remind, we have covered the following: Representativeness bias, familiarity bias, anchoring, false reference points, mental accounting, sunk cost bias, conservatism bias, status quo bias, confirmation bias, cognitive dissonance, loss aversion and regret aversion, disposition effect, overconfidence, self-attribution bias, illusion of control, endowment bias. Note, there are others too that did not make the slide deck. Feel free to diagnose further if you recall something from the readings that fits. Also note that this investor does not suffer from all of these biases.

4. Discuss the utilitarian, emotional and expressive wants of the investor. What seem to drive him the most? Least? Why might this be problematic?

The utilitarian, emotional, and expressive want of Sean Simon's investor was to better the society that he grew as a whole which explains why he chose to turn an the ruins of an old castle into a modernized attraction for guests who want to revisit and experience that old piece of history. Sean was driven by the pressure and urge to fulfill his childhood dream that would benefit society as a whole. This would be problematic because it does not consider justice and focuses on imagining the specific course of actions...