General Remarks

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Downloads

• Informational Eciency versus Behavioral Finance
• The Revelation of Private Information Through Trading
• The Limits to Arbitrage
• Herd Behavior: Informational Externalities

Characterizing the course

Behavioral Finance explains financial phenomena by agents who are bounded rational. It consists of two building blocks: the limits to arbitrage and investor psychology. The aim of this lecture is to give students an overview over the field of behavioral finance. At the end of the semester students should know under which conditions arbitrage does not work, how behavioral patterns guide agents' investment decisions, when herd behavior occurs and what implications bounded rationality has for market outcomes.

Course Contents

• Market Efficiency and Market Anomalies
• The Transmission of Private Information
• The Limits to Arbitrage: Noise Trader Risks in Financial Markets
• Herd behavior in Financial Markets
• Investor Psychology
• Behavioral Corporate Finance

Time Table

Literature

The literature for each session is provided and discussed in class.