Behavioural Finance

Behavioural Finance

The course in Behavioural Finance introduces the students to the topics of positive economic theory, which identifies and studies the actual behaviour of investors, observed in financial markets and arising from human psychology. Among the main topics that the course covers in depth are the distinction between traditional and behavioural finance, the presentation of emotional and cognitive biases affecting the perceptions and investment decisions of individuals, as well as studying different types of market anomalies. The course uses traditional and behavioural theoretical framework, mathematical models and empirical research. Practical examples are based on experience and data from European and American stock markets. The course focuses on the following topics: 

• Introduction to Behavioural Finance.
• Traditional and Behavioural Finance – main differences
• Emotional Biases – review, types and advices for overcoming
• Cognitive Biases – review, types and advices for overcoming
• Making financial decisions: Expected Utility Theory and Prospect Theory
• Neuroscientific and Evolutionary Perspective
• Emotional Factors and Social Forces
• Efficient Market Hypothesis – review and types
• Market anomalies – fundamental, calendar and technical
• Behavioural Portfolio Theory, Adaptive Market Hypothesis, Behavioural Asset Pricing Theories
• The Behavioural Investor Types Framework – review, models, limitations