Be­ha­vi­or­al Fin­ance

Fagets indhold

The objective of the course “Behavioural Finance” is to provide bachelor students with a broad understanding of how human psychology affects financial decisions, with specific reference to the impact on financial markets, corporate finance, and personal financial decisions.

The course builds upon foundational insights from behavioral and experimental economics. These fields provide rigorous tools, often developed through carefully designed experiments, for uncovering how people make financial decisions, particularly when faced with uncertainty, time trade-offs, and complex social or ethical considerations. By integrating these methods, we gain deeper insights into the mechanisms behind individual behavior in financial settings.

There are two sides to the course. The "soft" side concerns the psychology of decision making. The "hard" side concerns modern empirical finance, as used in many hedge fund strategies, for example. The teaching of both sides focuses more on intuition and understanding rather than technical skills. The teaching is research-based, drawing on findings from the current academic literature, and covers a large quantity of material.

The course will provide students with tools to understand how people process information and (under/over-) react to it during regular and crisis times, as well as the consequences for financial markets and individuals.

For example, the course will provide students with the necessary tools to understand many important current relevant issues such ESG investing, the role of social media networks in asset prices, investment and savings decisions during crisis and turbulent times, and many others. For instance, the course provides the tools to understand: i) why people care about ESG and green investment options, ii) possible ethical dilemmas and trade-offs people have to make when investing this way, iii) why that is relevant for society, iv) how people make mistakes when making ESG investment decisions, and v) how we can help them.

Many of the concepts and theories we review in the course can be used to understand people's perception of societal challenges (e.g., green transition), how they might want to make a difference by investing in ways that reflect their values and how we can help people achieve their financial goals in a sound way conditional on their values.