Course Descriptions
Behavioral
Finance ( 2 units )
Over the last 25 years, psychologists have come to better
understand the processes by which people make judgments
and decisions. They have identified common judgment and
decision heuristics and the biases associated with these.
An understanding of one's own decision biases and those
of others is an important tool for managers. Behavioral
Decision Theory has also contributed to our understanding
of financial markets. This course discusses the common biases
and heuristics identified by psychologists. Topics will
include overconfidence, the attribution theory, the representative
heuristic, the availability heuristic, anchoring and adjustment,
fairness, and prospect theory. We will try to gain an understanding
of how these biases affect managers, investors, and financial
markets.
