040013 VK KFK CF/FI/FM: Behavioural Finance (2015S)

Traditionally, Financial Economics assumes that investors and other market participants are perfectly rational. While this is a good first approximation, we currently know there are a number of systematic biases in people’s behaviour. The goal of this course is to discuss how these biases affect financial markets and investors’ decisions. We will start with describing the most relevant deviations (such as overconfidence, loss aversion and others), and we will continue with various financial applications. We will talk about bubbles, herding, implications for corporate decisions and investors’ behaviour.