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Undergraduate Program

1. F419

   Behavioral Finance

   • 15-weeks
   • 3 credits
   • Prerequisite: (F303 or F304) and F305

   How human psychology influences the decisions of investors, markets, and managers. Learn how to avoid systematic investment errors, critically evaluate evidence of apparent anomalies in financial markets, and how to escape decision traps that afflict corporate managers.

   Part I: Conventional Finance, Prospect Theory, and Market Efficiency

   Introduction to Behavioral Finance

   Rational Agent Foundations: Expected Utility Theory                     

   Review: Asset Pricing, Market Efficiency, and Agency Relationships   

   Prospect Theory, Framing, and Metal Accounting                               

   Challenges to Market Efficiency                                                                                               

   Part II: Behavioral Science Foundations

   Heuristics and Biases                                                                         

   Overconfidence                                                                                 

   Emotional Foundations                                                                          

   Part III: Investor Behavior

   Implications of Heuristics and Biases for Financial Decision-making     

   Implications of Overconfidence for Financial Decision-making             

   Individual Investors and the Force of Emotion                                       

   Midterm 1

   Part IV: Social Forces

   Social Forces: Selfishness or Altruism?                                               

   Social Forces at Work: The Collapse of an American Corporation       

   Part V: Market Outcomes

   Behavioral Explanations for Anomalies                                                

   Do Behavioral Factors Explain Stock Market Puzzles?                       

   Part VI: Corporate Finance

   Rational Managers and Irrational Investors                                           

   Behavioral Corporate Finance and Managerial Decision Making           

   Part VII: Retirement, Pensions, Education, Debiasing, and Client Management

   Understanding Private Saving Behavior and Improving DC Pensions     

   Debiasing, Education, and Client Management                                  

   Part VIII: Money Management

   Behavioral Investing                                                                             

   Midterm 2

   Part IX: Active Investment

   Active Investment Strategies: What they are doing and why it might work

   Active Investment Strategies: Evidence that Active Management works

   Investment Philosophies: Momentum of Common Stock Prices

   Investment Philosophies: Value and Growth Investing

   Sustainable Investing                 

   Group Presentations