Behavioral Finance

Catalog description

This course aims to investigate psychology's contribution to finance and economics. The standard approach in finance theory is based on the assumption of rational and unemotional economic agents. However, the anomalies in the financial markets have evidenced the decisions of investors may not be in line with this assumption, leading to inexplicable events such as bubbles. This course discusses psychological explanations for irrational financial decisions. The analysis of deviations from rationality will lead us to the predictability of financial asset price movements by employing psychological principles and explanation of real world market anomalies. Upon successful course completion, students will better understand the decision behavior of an individual investor within a market context. Prerequisites: FIN 504 .