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Behavioral Finance
040134; Monday: 02:00pm - 04:00pm (H3), Wednesday: 12:00pm – 02:00pm (H3); 1. Term

News

  • The first class of this course will take place on Monday, 9 October 2017, 14:15 – 15:45 p.m. in room H3.
  • Course materials are available for download in Learnweb.
    (search for "Behavioral Finance WS 2017/18")

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Date File Comment


Course Information

Semester: Winter Term 2017/2018
Term: 1st term
Course Number: 040134
Lecturer: Dr. Michael Goedde-Menke
Contact Persons: Dr. Michael Goedde-Menke
Room: H3
Dates: Monday: 02:00pm - 04:00pm, H3
Wednesday: 12:00pm – 02:00pm, H3
Language: English
Credits: 3
Semester hours: 2
Module(s): FCM02: Behavioral Finance (english) - Master of Science 'Betriebswirtschaftslehre' (PO 2010)

Description / Main Topics

Main topics and learning objectives:

The class delivers an introduction to the modern research field "Behavioral Finance". Behavioral Finance aims to explain and predict financial decision making and financial market data by incorporating behavioral insights on individual judgment and decision making. First, systematic errors in individual decision making will be presented and frequently used heuristics will be explained. Afterwards, the consequences of the biases and heuristics will be discussed in a financial context and supported by empirical and experimental research findings. Finally, the implications for financial markets (esp. security prices and turnover) will be considered and the relevance of behavioral findings in the context of the market efficiency hypothesis and arbitrage considerations will be discussed. The lecture will be supported by a tutorial. This module will be taught in English.

Themes 

Learning objectives 

Motivation

To understand the key perspective of behavioral finance and to be able to evaluate it in the light of the traditional approaches.

Systematic errors in individual decision making 

To learn about systematic deviations from rational judgment and decision making by individuals. 

Investor behavior 

To understand the consequences of systematic errors in decision making for investors, e.g. with respect to retirement provisions. 

Behavioral Finance and markets 

To comprehend the impact of irrational behavior on financial markets. 

Selected anomalies and trading strategies

To appreciate the role of behavioral insights for creating trading strategies. 

 

Learning Outcomes

The students will attain a modern view on financial markets, where not only perfectly rational decision makers (homo oeconomicus) act, but also real decision makers with all their flaws and weaknesses. The students become equipped to apply this perspective (behavioral economics) to many other fields, for example to discuss the effectiveness of incentive schemes or the design of contracts and products. By discussing current studies as well as the implementation of small experiments in the lecture and exercise sessions, the students will achieve strong skills of advanced research methodology. 

Course Assessment
Final written exam

Prerequisites

Comment

Reading Material


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