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2020/2021  KAN-CPHIV1802U  Behavioural Finance

English Title
Behavioural Finance

Course information

Language English
Course ECTS 7.5 ECTS
Type Elective
Level Full Degree Master
Duration One Quarter
Start time of the course Second Quarter
Timetable Course schedule will be posted at calendar.cbs.dk
Max. participants 40
Study board
Study Board for BSc/MSc in Business Administration and Philosophy, MSc
Course coordinator
  • Jimmy Martinez-Correa - Department of Economics (ECON)
  • Steffen Andersen - Department of Finance (FI)
Main academic disciplines
  • Finance
  • Methodology and philosophy of science
  • Economics
Teaching methods
  • Face-to-face teaching
Last updated on 24-01-2020

Relevant links

Learning objectives
To attain the top grade, students are required to have a good understanding of the major concepts and issues in behavioral finance. This includes the ability to:
  • Identify and apply psychological concepts to financial markets and financial decision-making.
  • Compare and contrast behavioral and non-behavioral explanations of financial phenomena.
  • Apply the psychological and behavioral finance concepts to new problems outside the finance discipline.
Course prerequisites
The course is part of the Minor: “Financial Decision-Making in a Social Context: History, Sociology, Behavioral Finance and Corporate Finance”.
Examination
Behavioural Finance:
Exam ECTS 7,5
Examination form Home assignment - written product
Individual or group exam Individual exam
Size of written product Max. 10 pages
Assignment type Essay
Duration 72 hours to prepare
Grading scale 7-point grading scale
Examiner(s) One internal examiner
Exam period Winter and Winter
Make-up exam/re-exam
Same examination form as the ordinary exam
Description of the exam procedure

Please note that this course is part of the Minor “Financial Decision-Making in a Social Context: History,Sociology, Behavioral Finance and Corporate Finance”.

 

Course content, structure and pedagogical approach

 

The standard rational paradigm in economics of the last fifty years has been highly successful in explaining aggregate market behavior. However, anomalies have been accumulating that are difficult to explain in terms of the standard rational paradigm, many of which are consistent with recent findings from psychology. Behavioral finance and economics makes this connection, applying insights from psychology to decision making and its consequences. It puts a human face on the financial markets and agency contracts, and recognizing that market participants are subject to biases that have predictable effects on prices and decisions. It thus provides a powerful new tool for understanding decision making and one that complements, rather than replaces, the standard rational paradigm.

 

At their core, behavioral theories analyze the ways that people make decisions. Besides the impact on financial markets and individual decision making, this also has relevance to corporate decision making, investor behavior, and personal financial planning. Our psychological biases have real financial effects, whether we are corporate managers, professional investors, or personal financial planners. When we understand these biases, we can make better decisions ourselves, and better understand the behaviors of others and of markets.  

 

The objective of the course is to provide master students with a broad understanding of how human psychology affects decisions, with specific reference to the impact on financial markets, corporate finance, and personal financial decisions. The teaching is interactive and students are expected to participate in class discussions.

 

The course will provide students with an understanding of how human psychology leads to biases and mistakes in the financial decisions of others and potentially of themselves. Through an awareness of these biases and mistakes, students will be better able to mitigate them as finance industry professionals, managers in non-financial firms, and investors of their own money.

 

 

Description of the teaching methods
The course will be taught as a mixture of lectures and class dicussion, group presentations and case-based discussion.
Feedback during the teaching period
Feedback in relation to lectures and cases is integrated into the respective classes. In relation to group presentations each group will receive feedback to and evaluation of their presentation.
Student workload
Class teaching 36 hours
Preperation for Class 146 hours
Preperation for the exam 30 hours
Expected literature

Ackert, Lucy, and Richard Deaves, 2009, Behavioral Finance: Psychology, Decision-Making, and Markets.

A few topical pages or chapters from other books

Some journal articles

Last updated on 24-01-2020