851-0252-10L Project in Behavioural Finance
|Semester||Spring Semester 2020|
|Lecturers||S. Andraszewicz, C. Hölscher, D. Kaszás|
|Periodicity||every semester recurring course|
|Language of instruction||English|
|Comment||Number of participants limited to 40|
Particularly suitable for students of D-MTEC
|Abstract||This interactive practical course provides and overview of the key topics in behavioral finance. Along studying information about investor's behavior, decision-making, cognitive, biological and personality markers of risk taking and measuring risk appetite, students train critical thinking, argumentation and presentation. The learning process is based on interactive discussions and presentations.|
|Objective||This course provides an overview of the key topics in behavioural finance and gives the opportunity for a first hands-on experience in designing, analysing and presenting a behavioural study. In the first half of the semester, students present papers from different topics within behavioural finance, including Judgment and Decision Making, psychometrics and individual differences, and risk perception and eliciting people’s propensity to take risk, biological markers of risk taking and investment behavior and trading games. The paper presentations are informal, require no power-point presentations and are followed by a discussion with the rest of the students in the class. The goal of these presentations is three-fold: in an interactive and engaging way, to provide an overview of the topics contained in the area of behavioural finance, to teach students to extract the most relevant information from scientific papers and be able to communicate them to their peers and to enhance critical thinking during the discussion.|
In the middle of the semester, the students pick a topic in which they want to conduct a small study. Some topics will be offered by the lecturers, but students are free to choose a topic of their own.
This is followed by fine-tuning their research questions given found literature, data collection and analysis. At the end of the semester students receive feedback and advice on the data analysis and present the results in a formal presentation with slides. The final assignment is a written report from their study. Active participation in the meetings is mandatory to pass the course. This course does not involve learning by heart.
Key skills after the course completion:
- Overview of topics in behavioural finance
- Communication of research output in an a formal and informal way, in an oral and written form
- Critical thinking
- Argumentation and study design
|Content||- Giving presentations|
- How to quickly "read" a paper
- Judgment and Decision Making, Heuristics and Biases
- Biology on the trading floor
- Psychometrics and individual differences
- Eliciting people's propensity to take risks
- Experimental design in behavioural studies
- Experimental Asset Markets
|Lecture notes||All learning materials will be available to students over eDoz platform.|
|Literature||Tversky, A., & Kahneman, D. (1992). Advance in prospect theory: Cumulative representation of uncertainty. Journal of Risk and Uncertainty, 5(4), 297-323|
Rieskamp, J. (2008). The probabilistic nature of preferential choice. Journal of Experimental Psychology: Learning, memory and Cognition, 34(6), 1446-1465
Hertwig, R., & Herzog, S. (2009). Fast and frugal heuristics: Tools of social rationality. Social Cognition, 27(5), 661-698
Coates, J.M., Gurnell, M., & Sarnyai, Z. (2010). From molecule to market: steroid hormones and financial risk taking. Philosophical Transacations of the Royal Society B, 365, 331-343
Cueva, C., Roberts, R.E., Spencer, T., Rani, N., Tempest, M., Tobler, P.N., Herbert, J., & Rustichini (2015). Cortisol and testosterone increase financial risk taking and may destabilize markets. Nature, 5(11206), 1-16
Conlin, A., Kyröläinen, P., Kaakinen, M., Järvelin, M-R., Perttunen, J., & Svento, R. (2015). Personality traits and stock market participation. Journal of Empirical Finance, 33, 34-50
Kosinski, M., Stillwell, D., & Graepel, T. (2013). Private traits and attributes are predictable from digital records of human behavior. Proceedings in National Academy of Sciences, 110, 5802-5805
Oehler, A., Wedlich, F., Wendt, S., & Horn, M. (July 9, 2016). Available at SSRN: https://ssrn.com/abstract=2807401
Fenton-O'Creevy, M., Nicholson, N., Soane, E., & Willman, P. (2003). Trading on illusions: Unrealistic perceptions of control and trading performance. Journal of Occupational and Organizational Psychology, 76, 53-68
Frey, R., Pedroni, A., Mata, R., Rieskamp, J., & Hertwig, R. (2017). Risk preference shares the psychometric structure of major psychological traits. Science Advances, 3, 1-13
Schürmann, O., Andraszewicz, S., & Rieskamp, J. (2017). The importance of losses when eliciting risk preferences. Under review
Andraszewicz, S., Kaszas, D., Zeisberger, S., Murphy, R.O., & Hölscher, C. (2017). Simulating historical market crashes in the laboratory. Manuscript in preparation.
Allenbach, M., Kaszas, D., Andraszewicz, S., & Hölscher, C. (2017). Skin conductance response as marker or risk undertaken by investors. Manuscript in preparation.
Simic, M., Kaszas, D., Andraszewicz, S., & Hölscher, C. (2017). Incentive structure compatibility in a principal agent problem. Manuscript in preparation.
Sornette, D., Andraszewicz, S., Wu, K., Murphy, R.O., Rindlerm P., & Sanadgol, D. (2017). Overpricing persistance in experimental asset markets with intrinsic uncertainty. Under review.
Andraszewicz, S., Wu, K., & Sornette, D. (2017). Behavioural effects and market dynamics in field and laboratory experimental asset markets. Under review.
|Prerequisites / Notice||Grading is based the active participation in the class and the final project. There is no exam.|