Syllabus - Behavioral Finance Coordinator Instructor Dr...

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Behavioral Finance Coordinator & Instructor: Dr. Florian Peters Universiteit van Amsterdam Duisenberg school of finance Course Code: 6314M0202 Period: Block II, Fall 2012 Course Description The recent financial crisis and previous speculative episodes such as the Internet bubble have highlighted the failure of the rational representative investor paradigm as a foundation for financial market equilibrium. It is now widely recognized that deviations from this paradigm are both pervasive and structural. The objective of this course is to provide a comprehensive introduction to Behavioral Finance. This relatively new area integrates insights from psychology into economic models to better understand, predict, and possibly prevent (seemingly) irrational decision-making of investors and firms and the associated market outcomes. The course consists of three main building blocks: 1. Non-standard beliefs. Individuals are subject to distortions or biases in their beliefs and expectations such as overconfidence and optimism. 2. Non-standard preferences. Individuals can have risk preferences that appear irrational such as reference-dependence, loss aversion, or narrow framing. 3. Non-standard decision-making. Individuals are limited in their capacity to process all available information. They may be inattentive and/or use simplifying shortcuts for 1
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complex decision problems.
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