Chapter 1: Course content and goals
- What is behavioral finance? BF versus Traditional Finance (TF)?
- How do we make decisions? Are they rational? Rational preferences?
- Uncertainty, Risk, Expected Utility Theory and Risk attitude
- Diversification, CAPM and Market Efficiency
- Allais’ Paradox and Prospect Theory
- Biases and heuristics
- Biases in Decision-Making
- Disposition effect, Attention Bias and Excessive Trading
- Diversification and Home Bias
- Market Sentiment and Limits to Arbitrage
- Experiments: What? Why? How?
- Classification and design + Analysis of experimental data
- Usual and flipped classrooms (based on videos to be seen before coming in the classroom)
- Simple computerized experiments will be organized in order to illustrate several concepts
- Written exam (June) / Oral exam (August)
- A part of the final grade may be based on individual / group assignments
If possible, students are requested to bring a device allowing an internet connection (tablet, smartphone or laptop). You will need this device to access the 'app' specifically developped to boost interaction in this course and to replicate several scientific experiments.
- Daniel Kahneman, Thinking, Fast and Slow, Penguin Books, 2011.
- Daniel Kahneman, Paul Slovic & Amos Tversky, Judgement under Uncertainty: Heuristics and Biases, Cambridge University Press, 1982
- Richard Thaler & Cass Sunstein, Nudge: Improving Decisions About Health, Wealth, and Happiness, Penguin Books, 2009
- Itzhak Venezia, Lecture Notes in Behavioral Finance, World Scientific Publishing, 2018
Faculty or entity