URL study guide

https://studiegids.vu.nl/en/courses/2024-2025/E_FIN_BF

Course Objective

The aims of this course are to:
- recognize and understand a variety of systematic errors ("biases") in judgment under uncertainty;
- recognize and understand aspects of risk and time preferences that deviate from principles of rational choice;
- understand why such phenomena are relevant in the contexts of firms and financial markets.

Course Content

Understanding your own financial decision processes and those of others is fundamental to virtually every area of finance. Finance courses and textbooks mostly tell us how we should make financial decisions. This course asks how we actually do make financial decisions, using insights from psychology and behavioral economics. It repeatedly contrasts decision making behavior with rational norms and explains why people deviate systematically from these norms, with special attention for the behavior of investors and corporate financial managers. The course also discusses the concepts of market efficiency and speculative bubbles.

Teaching Methods

Lectures.

Method of Assessment

Written exam and assignment.

Literature


- Bazerman & Moore, "Judgment in Managerial Decision Making", Wiley, most recent edition.
- Pinker, 2021, "Rationality: What It Is, Why It Seems Scarce, Why It Matters", Penguin.
- Selected articles (to be announced).

Additional Information


- This course is an elective in the MSc Finance program.
- This course should NOT be chosen by students who have followed the BSc3 course "Judgment and Decision Making" (part of the Minor “Decision Making in Business and Society”) because of substantial overlap.
- This course should NOT be chosen by students who have followed the BSc3 course "Behavioral Finance and Real Estate" (part of the Minor “Real Estate Economics and Finance” and the Minor “Risk Management for Financial Institutions”) because of substantial overlap.

Entry Requirements

None.

Recommended background knowledge

Participants are expected to be familiar with the main concepts in finance and to have a basic understanding of common research methods.
Academic year1/09/2431/08/25
Course level6.00 EC

Language of Tuition

  • English

Study type

  • Master