Gone are the days when investment banks looked only for the numerical whiz kids to help them in their investment decisions. Now, they use psychologists to get a better insight of how investors' minds and the markets work.
"The classical models of economics make this assumption that we are all completely rational, all the time and all of finance theory is based around that," Greg Davies, head of behavioral and quantitative finance at Barclays, told CNBC. "But we don't have to look around us too far to realize that we're not entirely rational all the time and, in fact, markets are driven to a very large extent — particularly in the short-term — by issues of anxiety, stress and enthusiasm."
Davies told CNBC Europe's "Squawk Box" that, as a behavioral expert at Barclays, he uses his knowledge to try to help clients become better investors.
"[We do this] by helping them to understand their personalities better, their own proclivities, and how to make better long-term investing decisions by controlling their emotions," he said.
Read more about how behavioral issues are arriving to investment banks here: InvestmentBanksPsychologists