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Lecturer(s)
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Přílučíková Jana, Ing. Ph.D.
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Course content
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01. Introduction to Behavioral Finance 02. The Utility of Money, Contrasting Standard and Behavioral Finance Theories 03. Behavioral Finance Premises, Prospect Theory, and Disposition Effect 04. Correlation and Causation Errors and Related Fallacies in Financial Decision-making 05. Relative Probability Weighting and Related Problems in Financial Decision-making 06. The Availability Heuristic and Related Biases in Financial Decision-making 07. The Anchoring Heuristic and Related Biases in Financial Decision-making 08. The Representativeness Heuristic and Related Biases in Financial Decision-making 09. Overconfidence and Belief Perseverance Biases in Financial Decision-making 10. Affect Heuristic and Related Emotional Biases in Financial Decision-making 11. Behavioral Explanation for Market Anomalies 12. Final Review and Q&A Session
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Learning activities and teaching methods
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Lecturing, Observation, Activating (Simulation, games, dramatization), Teamwork, Experience (self-experience)
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| prerequisite |
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| Knowledge |
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| Principles of Microeconomics Money and Capital Markets |
| Principles of Microeconomics Money and Capital Markets |
| learning outcomes |
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| describe the distinctions between conventional and behavioral finance |
| describe the distinctions between conventional and behavioral finance |
| characterize the essence of heuristics and the cognitive, emotional, and socio-cultural biases to which individuals consistently succumb in the context of their financial decisions |
| characterize the essence of heuristics and the cognitive, emotional, and socio-cultural biases to which individuals consistently succumb in the context of their financial decisions |
| characterize key cognitive processes influencing financial decision-making of individuals |
| characterize key cognitive processes influencing financial decision-making of individuals |
| characterize the heuristics of availability, anchoring, representativeness, affect, and related biases in the context of financial decision-making of individuals |
| characterize the heuristics of availability, anchoring, representativeness, affect, and related biases in the context of financial decision-making of individuals |
| define the nature and main forms of market anomalies that may not be explained by conventional finance |
| define the nature and main forms of market anomalies that may not be explained by conventional finance |
| Skills |
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| analyze systematic errors in individuals' probability assessments during financial decision-making, including critically examining the ways in which the media tends to present probabilities |
| analyze systematic errors in individuals' probability assessments during financial decision-making, including critically examining the ways in which the media tends to present probabilities |
| analyze errors in individuals' understanding of causality in financial decision-making and mitigate the risk of overestimation or neglect of the base rate |
| analyze errors in individuals' understanding of causality in financial decision-making and mitigate the risk of overestimation or neglect of the base rate |
| recognize biased behaviour and assess the implications for financial decision making |
| recognize biased behaviour and assess the implications for financial decision making |
| analyze specific psychological factors influencing individuals' financial decision-making, including cognitive errors and emotional biases associated with irrational financial decision-making |
| analyze specific psychological factors influencing individuals' financial decision-making, including cognitive errors and emotional biases associated with irrational financial decision-making |
| develop a mental strategy for more informed financial decision-making for individuals, drawing on insights from psychology, neuroscience, and finance for greater effectiveness |
| develop a mental strategy for more informed financial decision-making for individuals, drawing on insights from psychology, neuroscience, and finance for greater effectiveness |
| teaching methods |
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| Knowledge |
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| Lecturing |
| Lecturing |
| Teamwork |
| Observation |
| Observation |
| Activating (Simulation, games, dramatization) |
| Activating (Simulation, games, dramatization) |
| Teamwork |
| Experience (self-experience) |
| Experience (self-experience) |
| assessment methods |
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| Essay |
| Essay |
| Composite examination (Written part + oral part) |
| Composite examination (Written part + oral part) |
| Grade (Using a grade system) |
| Grade (Using a grade system) |
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Recommended literature
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ACKERT, L., DEAVES, R. Behavioral finance: Psychology, decision-making, and markets. Australia: Cengage, 2010. ISBN 978-0-324-66117-0.
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BAKER, H. K, NOFSINGER, J.R. Behavioral finance: Investors, corporations and markets. N.J.: Wiley, 2010. ISBN 978-0-470-49911-5.
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BAKER, H.K., FILBECK, G., NOFSINGER, J.R. Behavioral finance: What everyone needs to know. New York: Oxford University Press, 2019. ISBN 978-0-19-086873-4.
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BODIE, Z. KANE, A., MARCUS, A. Chapter 9: Behavioral Finance and Technical analysis. In: Essentials of Investments. 12 ed.. McGraw Hill, 2022. ISBN 9781260772166.
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CFA Institute. CFA program curriculum 2020: level III. Volume 2, Behavioral finance and capital market expectations.. Charlottesville: Wiley., 2019. ISBN 978-1-946442-89-5.
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SCHWESER, C. CFA Level 3 2019 Program Exam Prep. SchweserNotes Book, 3. (Study Session 4- Behavioral Finance). United States of America, Kaplan, Inc., 2018. ISBN 978-1-4754-8100-6.
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THALER, R. H., SUNSTEIN, C.R. Nudge: improving decisions about health, wealth, and happiness. New Haven: Yale University Press, 2008. ISBN 9780300122237.
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THALER, R.H., GANSER, L. J. Misbehaving: The making of behavioral economics. New York: WW Norton, 2015. ISBN 978-0393352795.
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