English   Danish

2024/2025  DIP-DHDVV2001U  Behavioural Finance

English Title
Behavioural Finance

Course information

Language English
Course ECTS 5 ECTS
Type Elective
Level Graduate Diploma
Duration One Semester
Start time of the course Autumn
Timetable Course schedule will be posted at calendar.cbs.dk
Max. participants 50
Study board
Study Board for Graduate Diploma in Business Administration (part 2)
Course coordinator
  • Jimmy Martinez-Correa - Department of Economics (ECON)
Study Administration for HDFR: hdfr@cbs.dk
Main academic disciplines
  • Finance
  • Customer behaviour
  • Economics
Teaching methods
  • Face-to-face teaching
Last updated on 18-03-2024

Relevant links

Learning objectives
-Apply psychological concepts to financial markets, financial decision-making and new problems inside and outside of the finance industry.

-Identifying biases in financial and economic decision-making and where they come from.

-Study behavioral finance tools that can help people make better financial decisions.

The course will provide students with an understanding of how human psychology leads to biases and mistakes when making financial decisions. By being more aware of these biases, students will be better able to mitigate them as finance industry professionals, managers in non-financial firms, and investors of their own money.

The course will also provide students with tools to understand how people process information and (under/over-) react to it during regular and crisis times, as well as the consequences for financial markets and individuals. For example, the course will provide students with the necessary tools to understand many important current relevant issues such ESG investing, investment and savings decisions during crisis and turbulent times, and many others. The course provides the tools to understand: i) why people care about ESG and green investment options, ii) possible ethical dilemmas and trade-offs people have to make when investing this way, iii) why that is relevant for society, iv) how people make mistakes when making ESG investment decisions, and v) how we can help them.

Additionally, many of the concepts and theories we review in the course can be used to understand people's perception of societal challenges (e.g., green transition), how they might want to make a difference by investing in ways that reflect their values and how we can help people achieve their financial goals in a sound way conditional on their values. We will also study the "social dimension" of investing, for instance, how social media affects financial and economic choices (see for example, GameStop and meme-stock investing).
Course prerequisites
The course requires basic knowledge of economic theory and financial markets.
Behavioural Finance:
Exam ECTS 5
Examination form Written sit-in exam on CBS' computers
Individual or group exam Individual exam
Assignment type Written assignment
Duration 4 hours
Grading scale 7-point grading scale
Examiner(s) One internal examiner
Exam period Winter
Aids Limited aids, see the list below:
The student is allowed to bring
  • USB key for uploading of notes, books and compendiums in a non-executable format (no applications, application fragments, IT tools etc.)
  • Any calculator
  • In Paper format: Books (including translation dictionaries), compendiums and notes
The student will have access to
  • Access to Canvas
  • Access to the personal drive (S-drive) on CBS´ network
  • Advanced IT application package
Make-up exam/re-exam Oral Exam
Duration: 20 min. per student, including examiners' discussion of grade, and informing plus explaining the grade
Preparation time: No preparation
Examiner(s): If it is an internal examination, there will be a second internal examiner at the re-exam. If it is an external examination, there will be an external examiner.
Description of the exam procedure



Without exam aids.


One or more questions are drawn from key parts of the material and concepts covered in the course. The questions are answered using relevant illustrations, formulas, etc. The grade is determined on the basis of an overall assessment of the extent to which the answers meet the overall learning objectives.

Course content, structure and pedagogical approach

The teaching consists of 40 lessons, in lessons of either 4 or 2 hours. 


The course has a hands-on learning aproach with a range of case studies and real-life examples. Additionally, the course has a research-based teaching approach based on current academic literature.


The aim of the course is to give students a broad understanding of how human psychology influences financial decisions, with special reference to the impact on financial markets, corporate finance and personal financial decisions. 


There are two sides to the course. The “soft” side deals with the decision-making process. The “hard” side concerns modern empirical finance. The teaching on both sides focuses more on intuition and understanding rather than technical skills. The teaching is research-based, drawing on the results of current academic literature that links to the material in the textbook.


Students participating in the course are expected to have a basic understanding of statistics and be able to make usual financial calculations such as present value calculations and expected values. Similarly, a general knowledge of financial markets, financial institutions and financial instruments such as options is assumed.



Description of the teaching methods
Attendance lessons with online elements.

The teaching is mainly in English. The teaching should be inclusive for the participants, and participants are expected to participate actively in the lessons.
Feedback during the teaching period
We provide continuous feedback to students such that they can understand the concepts covered in the course and learn how to apply them both to real life situations/problems and to exam type questions. This continuous feedback is a key cornerstone of the learning process in the course.

For example, this feedback takes the form of exam type questions similar to previous semesters’ exam questions, as well as case studies designed by the instructor. These are normally based on real life problems and students try to solve the questions and discuss the cases in class. Afterwards, we discuss collectively potential solutions to the problems based on concepts discussed in the course.

Feedback can also take the form of discussions of real life problems that students identify themselves in their working and daily life. Many students connect the concepts we cover in class with their own experiences. This creates student-motivated discussions in which students get yet another chance to receive feedback on their analysis of the real-life problems they have identified themselves.
Student workload
30 scheduled lectures (attendance) + 10 lectures (Online: Pre-recorded or Online: Live). Minor changes in the number of attendance and online lectures can occur. 40 hours
Preparation (exam included) 97,5 hours
Further Information

Teaching days and times


  • Lecture (Attendance):
    • wednesday at 17:10-18:50 in week 35
    • wednesday at 17:10-20:40 in weeks 36, 38, 40, 44, 46, 48, 50
  • Onlineteaching (Online: Pre-recorded):
    • 10 lectures (not scheduled)


Changes may occur. 

Expected literature

Course Book (CB):
Ackert, Lucy, and Richard Deaves, 2009, Behavioral Finance: Psychology, Decision-Making, and Markets.


Additional references:


Baker, Malcolm, and Jeffrey Wurgler, 2007, Investor Sentiment in the Stock Market, Journal of Economic Perspectives 21(2): 129–151


Barber, Brad, and Terrance Odean, 2001, The Internet and the Investor, Journal of Economic Perspectives, 15(1): 41-54


Benartzi, Shlomo and Richard H. Thaler, 2007, Heuristics and Biases in Retirement Savings Behavior, Journal of Economic Perspectives 21(3): 81–104


Burnside, Craig, Martin Eichenbaum, Isaac Kleshchelski, and Sergio Rebelo, 2011, Do Peso Problems Explain the Returns to the Carry Trade? Review of Financial Studies, 24(3): 853-891


Caginalp, Gunduz, David Porter, and Vernon Smith, 2001, Financial Bubbles: Excess Cash, Momentum, and Incomplete Information, Journal of Behavioral Finance, 2(2): 80-99


Doya, Kenji, 2008, Modulators of decision making, Nature Neuroscience 11(4): 410-416


Garber, Peter M., 1990, Famous First Bubbles, Journal of Economic Perspectives, 4(2): 35-54


Hong, Harrison, and Jeremy C. Stein, 2007, Disagreement and the Stock Market, Journal of Economic Perspectives 21(2): 109–128


Hvidkjaer, Soeren, 2008, Small Trades and the Cross-Section of Stock Returns, Review of Financial Studies 21(3): 1123–1151


Kahneman, Daniel, and Dan Lovallo, 1993, Timid Choices and Bold Forecasts: A Cognitive Perspective on Risk Taking, Management Science 39(1): 17-31


Loewenstein, George, and Richard Thaler, 1989, Anomalies: Intertemporal Choice, Journal of Economic Perspectives, 3(4): 181-193


Malmendier, Ulrike, and Geoffrey Tate, 2008, Who makes acquisitions? CEO overconfidence and the market's reaction, Journal of Financial Economics 89(1): 20-43


McClure, Samuel M., David I. Laibson, George Loewenstein, and Jonathan D. Cohen, 2004, Separate Neural Systems Value Immediate and Delayed Monetary Rewards, Science 306(5695): 503 – 507


Odean, Terrance, 1999, Do Investors Trade Too Much? American Economic Review, 89: 1279-1298


Platt, Michael L., and Scott A. Huettel, 2008, Risky business: the neuroeconomics of decision making under uncertainty, Nature Neuroscience, 11(4): 398-403


Reimers, Stian, Elizabeth A. Maylor, Neil Stewart, and Nick Chater, 2009, Associations between a one-shot delay discounting measure and age, income, education and real-world impulsive behavior, Personality and Individual Differences, 47(8): 973-978


Shiller, Robert J., 2003, From Efficient Markets Theory to Behavioral Finance, Journal of Economic Perspectives 17(1): 83-104


Siegel, Jeremy J., and Richard H. Thaler, 1997, Anomalies: The Equity Premium Puzzle, Journal of Economic Perspectives, 11(1): 191-200


Thaler, Richard H., 1999, Mental Accounting Matters, Journal of Behavioral Decision Making 12: 183-206


Thaler, Richard H., and Eric J. Johnson, 1999, Gambling with the House Money and Trying to Break Even: The Effects of Prior Outcomes on Risky Choice, Management Science 36(6): 643-660


Tversky, Amos, and Daniel Kahneman, 1974, Judgment under Uncertainty: Heuristics and Biases, Science 185(4157): 1124-1131


Recommended Books


These are books that are easy and fun to read. They provide a quick insight into how behavioral finance is being used in the real world. They are not part of the syllabus.


Akerlof, George A., and Robert J. Shiller, 2009, Animal Spirits: How Human Psychology Drives the Economy, and Why it Matters for Global Capitalism. Princeton University Press


Ariely, Dan, 2009, Predictably Irrational, The Hidden Forces That Shape Our Decisions, 2nd Ed. Harper


Kahneman, Daniel, 2011, Thinking, Fast and Slow. Farrar, Straus and Giroux


Lewis, Michael, 2010, The Big Short: A True Story. W.W. Norton.


Shrefrin, Hersh, 2000, Beyond Greed and Fear: Understanding Behavioral Finance and the Psychology of Investing. Oxford University Press


Thaler, Richard H., and Cass R. Sunstein, 2009, Nudge: Improving Decisions About Health, Wealth, and Happiness. Yale University Press



Last updated on 18-03-2024