Applied Behavioral Finance

Lecture illustrated with case studies and decision games. Students will be encourage for active participation during the class. Discussion, critical and logical thinking are particularly welcome.

Behavioral Finance is a new area within financial economics that helps investors understand unusual asset prices and empirical observations originating out of capital markets. At its core, this field of study aids investors in navigating complex psychological trappings in market behavior and making smarter investment decisions. The course reveals the main foundations underpinning neoclassical capital market and asset pricing theory, as filtered through the lens of behavioral finance. It presents how asset prices are influenced by various behavioral heuristics and how these prices deviate from fundamental values due to irrational behavior of investors. Alternative explanations for various theoretical and empirical market puzzles are also discussed. Practical implications for market participants are underlined during the course.

The course aims: to confront the main foundations of the neoclassical theory of financial economics with allegations of the behavioral approach to capital markets,

to present elements of cognitive psychology, mainly heuristics and psychological biases that apply to investors, to show how behavioral inclinations impact on investor behavior, to demonstrate how irrational behavior of investors may impact asset pricing, to discuss various market anomalies and seek alternative explanations either on traditional theoretical framework or within behavioral approach, to seek practical implications of behavioral biases and market anomalies for market participant (investors, corporations, regulators), to learn how market imperfections and investor irrationality should be accounted for in formulating investing strategies in capital market.

Literatura podstawowa:

A. Szyszka, Behavioral Finance and Capital Markets: How Psychology Influences Investors and Corporations, Palgrave Macmillan, New York, 2013.

Literatura uzupełniająca:

1. K. Baker, J. Nofsinger, Behavioral finance: Investors, Corporations, and Markets, Wiley 2010.

2. H. Shefrin, Beyond Greed and Fear: Finance and the Psychology of Investing, Oxford University Press, 2000.

3. R. Thaler, Advances in Behavioral Finance, Russell Sage Foundation 1993.

4. R. Thaler, Advances in Behavioral Finance Vol. II, Princeton University Press, 2005.

Kryteria oceniania:

egzamin testowy: 90.00%

referaty/eseje: 10.00%

Lecture illustrated with case studies and decision games. Students will be encourage for active participation during the class. Discussion, critical and logical thinking are particularly welcome.

Behavioral Finance is a new area within financial economics that helps investors understand unusual asset prices and empirical observations originating out of capital markets. At its core, this field of study aids investors in navigating complex psychological trappings in market behavior and making smarter investment decisions. The course reveals the main foundations underpinning neoclassical capital market and asset pricing theory, as filtered through the lens of behavioral finance. It presents how asset prices are influenced by various behavioral heuristics and how these prices deviate from fundamental values due to irrational behavior of investors. Alternative explanations for various theoretical and empirical market puzzles are also discussed. Practical implications for market participants are underlined during the course.

The course aims: to confront the main foundations of the neoclassical theory of financial economics with allegations of the behavioral approach to capital markets,

to present elements of cognitive psychology, mainly heuristics and psychological biases that apply to investors, to show how behavioral inclinations impact on investor behavior, to demonstrate how irrational behavior of investors may impact asset pricing, to discuss various market anomalies and seek alternative explanations either on traditional theoretical framework or within behavioral approach, to seek practical implications of behavioral biases and market anomalies for market participant (investors, corporations, regulators), to learn how market imperfections and investor irrationality should be accounted for in formulating investing strategies in capital market.

Literatura podstawowa:

A. Szyszka, Behavioral Finance and Capital Markets: How Psychology Influences Investors and Corporations, Palgrave Macmillan, New York, 2013.

Literatura uzupełniająca:

1. K. Baker, J. Nofsinger, Behavioral finance: Investors, Corporations, and Markets, Wiley 2010.

2. H. Shefrin, Beyond Greed and Fear: Finance and the Psychology of Investing, Oxford University Press, 2000.

3. R. Thaler, Advances in Behavioral Finance, Russell Sage Foundation 1993.

4. R. Thaler, Advances in Behavioral Finance Vol. II, Princeton University Press, 2005.

Kryteria oceniania:

egzamin testowy: 90.00%

referaty/eseje: 10.00%

Lecture illustrated with case studies and decision games. Students will be encourage for active participation during the class. Discussion, critical and logical thinking are particularly welcome.

Behavioral Finance is a new area within financial economics that helps investors understand unusual asset prices and empirical observations originating out of capital markets. At its core, this field of study aids investors in navigating complex psychological trappings in market behavior and making smarter investment decisions. The course reveals the main foundations underpinning neoclassical capital market and asset pricing theory, as filtered through the lens of behavioral finance. It presents how asset prices are influenced by various behavioral heuristics and how these prices deviate from fundamental values due to irrational behavior of investors. Alternative explanations for various theoretical and empirical market puzzles are also discussed. Practical implications for market participants are underlined during the course.

The course aims: to confront the main foundations of the neoclassical theory of financial economics with allegations of the behavioral approach to capital markets,

to present elements of cognitive psychology, mainly heuristics and psychological biases that apply to investors, to show how behavioral inclinations impact on investor behavior, to demonstrate how irrational behavior of investors may impact asset pricing, to discuss various market anomalies and seek alternative explanations either on traditional theoretical framework or within behavioral approach, to seek practical implications of behavioral biases and market anomalies for market participant (investors, corporations, regulators), to learn how market imperfections and investor irrationality should be accounted for in formulating investing strategies in capital market.

Literatura podstawowa:

A. Szyszka, Behavioral Finance and Capital Markets: How Psychology Influences Investors and Corporations, Palgrave Macmillan, New York, 2013.

Literatura uzupełniająca:

1. K. Baker, J. Nofsinger, Behavioral finance: Investors, Corporations, and Markets, Wiley 2010.

2. H. Shefrin, Beyond Greed and Fear: Finance and the Psychology of Investing, Oxford University Press, 2000.

3. R. Thaler, Advances in Behavioral Finance, Russell Sage Foundation 1993.

4. R. Thaler, Advances in Behavioral Finance Vol. II, Princeton University Press, 2005.

Kryteria oceniania:

egzamin testowy: 90.00%

referaty/eseje: 10.00%