The main goal of the course is to provide students with a broad idea of how cognitive errors such as psychological bias influence our financial decisions. We will compare how the decisions prescribed by behavioral finance differ from the decisions implied by traditional finance.
In the first part of the course, we will focus on traditional economic theory and show that it cannot account for different anomalies and paradoxes in financial decision-making. Next, we will turn to psychology as the missing link that explains the discrepancies between traditional finance and actual human behavior. We will focus on the biases and common mistakes found in behavioral literature and what these mistakes imply. After gaining a foundational understanding of behavioral finance, we will turn to its applications – investment decisions, financial markets manias, managerial mistakes, the role of uncertainty and risk, and stock market puzzles.
To help in the learning process, students will participate in daily discussion boards, watch short video lectures, and work on weekly group projects. Additionally, students will apply concepts learned in class to create a virtual equity portfolio and will be asked to evaluate its performance using different performance metrics, etc. Occasionally, students will be assigned readings relevant to the topics covered.
By the end of this course, you will:
No prior knowledge of finance or economics is required. However, basic knowledge of algebra is expected, as well as the ability to engage in college-level reading.
Online sections of Pre-College courses are offered in one of the following modalities: Asynchronous, Mostly asynchronous, or Blended. Please review full information regarding the experience here.