30608 - BEHAVIORAL AND EXPERIMENTAL FINANCE
Department of Finance
KATRIN GOEDKER
Suggested background knowledge
Mission & Content Summary
MISSION
CONTENT SUMMARY
Part 1 Introduction
· Behavioral finance: How investors and markets behave
· Experimental finance: Principles of designing experiments in finance
Part 2 Current topics and applications I
· Nudging: Save more tomorrow
· Finding the optimal financial communication to clients
· Testing the value of financial advice
Part 3 Hands-on experiments
Part 4 Current topics and applications II
· Exploring market bubbles: What drives bubbles? Can we detect bubbles in foresight?
· Explaining trading behavior (including the role of subjective expectations, overconfidence, risk appetite, emotions, and attention)
· Understanding bank runs: Investigating causes, contagions, and preventions
Intended Learning Outcomes (ILO)
KNOWLEDGE AND UNDERSTANDING
- Illustrate and explain financial decision-making and markets in a psychologically more realistic way than classic finance
- Illustrate and explain how experiments can inform market participants, practitioners, and policymakers
APPLYING KNOWLEDGE AND UNDERSTANDING
- Apply a psychologically more realistic view on financial decision-making and markets
- Design, run, and analyze experiments studying financial decision-making and markets
Teaching methods
- Face-to-face lectures
- Exercises (exercises, database, software etc.)
- Individual assignments
- Group assignments
DETAILS
- The learning experience of this course is based on face-to-face lectures and individual as well as group assignments.
- Each class is enriched by interactive discussions.
- Excercises and assignments aim at better connecting the body of knowledge covered in the course with real life examples, typically focused on complex cases.
- The interaction between the instructor and students during the discussions and the presentations helps students understand how professionals in the field approach a real-life problem.
Assessment methods
Continuous assessment | Partial exams | General exam | |
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ATTENDING AND NOT ATTENDING STUDENTS
The students can take one optional team assignment and must take one general exam based on the full syllabus. Thus, there are two possible cases:
· Case 1: student took both team assignment and general exam. Then the final grade will be the maximum of
a) A combination of the student’s grade on the team assignment (weight of 40%) and the general exam (weight of 60%), and
b) A 100% weight on the general exam
Note, the grade of the team assignment is valid until 31/12/2024.
· Case 2: student did not take the team assignment. Then the final grade will be the grade of the general exam (weight 100%).
Teaching materials
ATTENDING AND NOT ATTENDING STUDENTS
- I post class notes and additional readings.
- In addition, the textbook can complement students' understanding: Statman, Meir (2017). Finance for Normal People: How Investors and Markets Behave. Oxford University Press.