Behavioral Finance

2018-2019

Course Objective

The aims of this course are to:
- recognize and understand a variety of systematic deviations from
rationality in judgment;
- recognize and understand aspects of risk and time preferences that
deviate from theories of rational choice;
- understand why such phenomena are relevant in the contexts of firms
and financial markets.

Course Content

Finance courses and textbooks mostly tell us how we should make
financial decisions. This course asks how we actually do make financial
decisions, using insights from psychology and behavioral economics. It
repeatedly contrasts decision making behavior with rational norms and
explains why people deviate systematically from these norms.
Understanding your own financial decision processes and those of others
is fundamental to virtually every aspect of financial management,
including valuation, capital budgeting, corporate governance, portfolio
selection, financing issues, dividend policy, and risk management.

Teaching Methods

Lectures (2 times 2 hours per week).

Method of Assessment

Written exam (80%) and assignment (20%).

Entry Requirements

None.

Literature

- Bazerman & Moore, Judgment in Managerial Decision Making, Wiley, most
recent edition.
- Selected articles (to be announced).

Additional Information

- This course is an elective in the MSc Finance program and in the MSc
Business Administration (Financial Management track) program.
- This course should NOT be chosen by students who have followed the
BSc3 course Judgment and Decision Making (part of the Minor
"Understanding and Influencing Decisions in Business and Society")
because of substantial overlap.
- This course should NOT be chosen by students who have followed the
BSc3 course Behavioral Finance and Real Estate (part of the Minor "Real
Estate Economics and Finance" and the Minor "Risk Management for
Financial Institutions") because of substantial overlap.

Recommended background knowledge

Participants are expected to be familiar with the main concepts in
finance and have a basic understanding of common research methods.

General Information

Course Code E_FIN_BF
Credits 6 EC
Period P4
Course Level 400
Language of Tuition English
Faculty School of Business and Economics
Course Coordinator prof. dr. M.J. van den Assem
Examiner prof. dr. M.J. van den Assem
Teaching Staff

Practical Information

You need to register for this course yourself

Last-minute registration is available for this course.

Teaching Methods Lecture
Target audiences

This course is also available as: