BUS-F519 Behavioral Finance

• 7 weeks
• 1.5 credits
• Prerequisite(s): MBA Core

An alternative title for this course might be The Psychology of Finance. Behavioral finance is a relatively new subfield in finance that marries the quantitative methods from traditional finance with research in cognitive psychology suggesting that individuals make certain types of systematic decision errors in certain circumstances. The primary question in behavioral finance is whether these decision errors have an impact in financial markets, for example by overvaluing or undervaluing certain types of investments under certain conditions.

1. What does it mean to be rational vs. irrational?
2. Over reaction
3. Under reaction
4. Loss aversion
5. Mental accounting, anchoring

Course Materials: The Winner's Curse, by Richard Thaler; Beyond Greed and Fear, by Hersh Shefrin. Based upon class participation, projects and/or exam.