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Behavioral Finance

Upon successful completion of this course, participants are familiar with key concepts and contributions in the area of Behavioral Finance which incorporates psychological evidence into financial economics. Based on a revision of the fundamentals of rational decision-making and experimental economics, course participants receive a comprehensive introduction to the prospect theory which has become established as the key behavioral alternative to the expected utility theory. Moreover, participants acquaint themselves with individuals’ behavioral biases and decision heuristics relevant in an investment context (e.g. overconfidence, representativeness, and mental accounting) and study their implications within the corporate sphere and at the market level. The course is accompanied by a students’ colloquium where participants gather in teams to present seminal contributions in the field of Behavioral Finance to their fellow students.

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