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2025/2026  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)
Programme 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
  • Consumer behaviour
  • Economics
Teaching methods
  • Face-to-face teaching
Last updated on 21-03-2025

Relevant links
Learning objectives
By the end of the course, students will be able to:
  • Apply psychological and behavioral concepts to financial decision-making in markets, organizations, and personal finance.
  • Identify and explain how cognitive biases and emotions systematically influence financial behavior.
  • Evaluate real-world financial phenomena—such as ESG investing, market bubbles, and crisis behavior—through the lens of behavioral finance theories.
  • Analyze how people process financial information and react (or fail to react) to it under uncertainty.
  • Use behavioral insights to design strategies for improving decision-making in professional and personal financial contexts.
Course prerequisites
The course requires basic knowledge of economic theory and financial markets.
Examination
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
  • Canvas
  • 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

Re-exam:

 

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. 

 

The course is designed for students from a wide range of professional backgrounds—not just those in finance or financial advisory roles. Whether you work in business, government, consulting, or non-profits, the course will help you better understand the financial behavior of clients, colleagues, customers, and yourself.

 

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.


In addition to established theories, the course explores cutting-edge insights from psychology and neuroscience on the role of emotions in decision-making and the evolutionary origins of the way we make choices. By understanding how deeply-rooted mechanisms—such as fear, pride, and social instincts—shape our financial choices, students gain a powerful framework for recognizing and mitigating bias. This frontier knowledge gives participants a unique edge: not only in interpreting real-world behavior, but also in becoming more reflective and effective decision-makers themselves.

 

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.

 

 
Research-based teaching
CBS’ programmes and teaching are research-based. The following types of research-based knowledge and research-like activities are included in this course:
Research-based knowledge
  • Classic and basic theory
  • New theory
  • Teacher’s own research
Research-like activities
  • Development of research questions
  • Discussion, critical reflection, modelling
  • Peer review including Peer-to-peer
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.

Active participation, experience sharing, and critical thinking are encouraged. Teaching is research-based but focuses on intuition and application over technicality.
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, 49
       
  • 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.

 

Some more suggested readings:

 

Lo, Andrew W., 2019, Adaptive Markets: Financial Evolution at the Speed of Thought, Princeton University Press.

 

Page, Lionel, 2022, Optimally Irrational: The Good Reasons We Behave the Way We Do, MIT Press.

 

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

 

Kahneman, Daniel, Sibony, Olivier, & Sunstein, Cass R, 2021, Noise: A Flaw in Human Judgment, New York: Little, Brown Spark.

 

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

 

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 21-03-2025