Behavioral Finance

2023/2024

Academic Year

ENG

Instruction in English

6

ECTS credits

Author

Stepanova, Anastasia N.

Delivered at:

School of Finance

Course type:

Elective course

When:

2 year, 1, 2 module

Instructors

Besstremyannaya, Galina

Guseva, Olga

Poduhovich, Dmitry

Stepanova, Anastasia N.

Course Syllabus

Abstract

During several decades financial theories have been guided by efficient markets theory. The key assumption of the major financial models is the rational behaviour of investors and other agents. But in reality this assumption is regularly being broken. Markets are often inefficient. Information disclosure is expensive. Sunny weather or upcoming vacations may change the investors’ behaviour and bias their decisions.Each investment decision depends on our previous investment decisions: we are anchored. We do not live in vacuum. Behavioural biases attracted the attention of the academia and investors’ world in late 1990s. The key question was whether these biases from the rational behaviour might have significant impact over market estimations and investment decisions.Empirical tests demonstrate that behavioural biases may significantlychange even classicalasset pricing models. Several bestsellers were written on the behavioural finance issues during 2000s. CFA curriculum part devoted to behavioural finance becomes larger and larger every year. Behavioural biases do matter. So, if you want to be successful as a portfolio manager or individual investor, as a CFO or independent director and of course as a consulter, you should take into account different behavioural biases. Based on key concepts of cognitive psychology decision theory, behavioural finance studieshow real-life investorsinterpret and act on available information.This course is a finance course of advanced level.