BEHAVIORAL FINANCE

Catalog description

Behavioral Finance will examine the interrelationships between classical financial economics and psychology. For much of the past half century, financial economists have largely assumed that people behaved rationally. More recently insights from psychology have drawn many of our previous assumptions into question. The Behavioral Finance class will examine the various biases that have been identified that impact financial decision making. The course will focus on identifying conditions when these biases may be more likely to occur (for instance when other market imperfections are present) so that as investors (or those marketing to investors) the students will be better able to set aside their bias and make sound, rational, investment decisions. The course will emphasize the Investments and Personal Finance side of the financial spectrum but will also cover the same areas of corporate finance whereby managers and employees behave in ways that puzzle the classical financial economist.