Behavioral Finance WS 2018

General Remarks

Relevant information and downloads will be made available via Moodle.

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

  • Informational Efficiency versus Behavioral Finance
  • The Revelation of Private Information Through Trading
  • The Limits to Arbitrage
  • Herd Behavior: Informational Externalities
  • Herd Behavior: Payoff-Externalities and Bank Runs
  • Herd Behavior: Reputational Herding
  • Experimental Evidence on Herding Behavior
  • Investor Psychology


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


Dr. Markus Demary from the Cologne Institute for Economic Research.

Organization: Syed Wasif Hussain

Dates and Room

The lecture takes place on...

  • Friday, 09.11.2018 in E20, Heho 18
    • 12.00 pm - 06.00 pm
  • Saturday, 10.11.2018 in E20, Heho 18
    • 08.00 am - 12.00 pm
  • Friday, 07.12.2018 in E20, Heho 18
    • 12.00 pm - 06.00 pm
  • Saturday, 08.12.2018 in E20, Heho 18
    • 08.00 am - 12.00 pm
  • Friday, 18.01.2019 in E20, Heho 18
    •  12.00 pm - 06.00 pm
  • Saturday, 19.01.2019 in E20, Heho 18
    • 08.00 am - 12.00 pm


Exam dates: please see Moodle page.

The exam is of closed form, which means you have to take the first exam to be allowed to register for the retake.

Module description

This lecture is open for

  • Wiwi (Bsc, MSc, Dipl)
  • WiMa/WiPhy (BSc, MSc, Dipl)
  • Finance (MSc)

and others according to study plan.

Module description