Course description

Behavioural Finance


Over the past decades, the field of finance has developed a successful paradigm based on the notions that investors and managers are rational and that the market is efficient. In recent years, however, anecdotal evidence as well as theoretical and empirical research has shown this paradigm to be insufficient to describe various features of actual financial markets. In this course, we explain financial market phenomena by incorporating institutional, social, cognitive, and emotional biases to the traditional paradigm. This broader perspective is called behavioral finance.

The objective of this course is to give students an understanding of investor and managerial behavior and its impact on financial market outcomes. The participants should be able to identify most common obstacles to making rational decisions, to debias their own decisions, and to understand the risks and opportunities associated with biased decisions. The course spans all major fields of finance, including household finance, asset pricing, and corporate finance.

Course content

  • Behavioral finance vs. traditional finance
  • Behavioral finance and investor behavior
  • Behavioral finance and asset pricing
  • Behavioral finance and corporate behavior

Learning outcome knowledge

Students will acquire an understanding of the following topics:

  • What is behavioral finance?
  • How do people make investment decisions?
  • How does investor behavior affect asset prices?
  • How do firms respond to investor behavior?


Exam organisation

  • Written assignment: 10%
  • Written assignment: 20%
  • Class participation: 10%
  • Written exam: 60%