Behavioral Economics and Finance
This course provides a broad overview of the fields of behavioral economics and finance. The focus of the course will be on introducing
and studying biases in decision making within economic and financial contexts, drawing on insights from psychology. Students should leave the course with a better understanding of both the sources of irrational behavior and their consequences for consumers, businesses, and financial markets.
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Nudge: Improving Decisions About Health, Wealth, and Happiness by Richard H. Thaler, Cass
1 Behavioral Economics: Past, Present, Future (Richard Thaler) 2016.
2 The End of Behavioral Finance (Richard Thaler) 2010.
3 Boys will be Boys: Gender, Overconfidence, and Common Stock Investment (Brad Barber and Terrance Odean) 2001.
4 Do women shy away from competition? Do men compete too much? (Muriel Niederle, Lise Vesterlund) 2007.
5 Advances in prospect theory: Cumulative representation of uncertainty (Daniel Kahneman and Amos Tversky) 1992.
6 Do Professional Traders Exhibit Myopic Loss Aversion? An Experimental Analysis (Michael Haigh and John List) 2005.
7 Realization Effect: Risk-Taking After Realized versus Paper Outcomes (Alex Imas) 2016.
8 Bubbles and Experience: An Experiment (Martin Dufwenberg, Tobias Lindqvist, and Evan Moore) 2005.
Teaching will expand on required course readings, including relevant articles in economics and finance journals. Students are expected to attend classes and participate in class discussions. There will be three quizzes on Moodle based on the material covered in-class. There will be one group project which will require working in a team to present an analysis of a behavioral bias. Groups will present their project to the class.
The Final Exam is mandatory and must cover the entire span of the course. Its weight in the final grade can be between 30 to 70%. The remainder of the evaluation can consist of class participation, midterm exams, in class tests, etc. Overall, written in class assessment (final exam, midterm) must have a weight of at least 50%.
• Class Participation 10%
• Moodle Quizzes (3) 30%
• Group Project 20%
• Final Exam 40%
Main topics include: bounded rationality, overconfidence, prospect theory, loss-aversion, herding, and bubbles. Previous experience with intermediate microeconomics is recommended.
Programs where the course is taught: