20554 - PSYCHOLOGY, ECONOMIC ANALYSIS, AND BEHAVIORAL FINANCE
Department of Finance
Course taught in English
Go to class group/s: 31
CLMG (6 credits - I sem. - OP | SECS-P/01) - M (6 credits - I sem. - OP | SECS-P/01) - IM (6 credits - I sem. - OP | 12 credits SECS-P/01) - MM (6 credits - I sem. - OP | SECS-P/01) - AFC (6 credits - I sem. - OP | SECS-P/01) - CLELI (6 credits - I sem. - OP | SECS-P/01) - ACME (6 credits - I sem. - OP | SECS-P/01) - DES-ESS (6 credits - I sem. - OP | SECS-P/01) - EMIT (6 credits - I sem. - OP | SECS-P/01) - GIO (6 credits - I sem. - OP | SECS-P/01) - DSBA (6 credits - I sem. - OP | SECS-P/01) - PPA (6 credits - I sem. - OP | SECS-P/01) - FIN (6 credits - I sem. - OP | SECS-P/01)
Course Director:
NICOLA GENNAIOLI
NICOLA GENNAIOLI
Suggested background knowledge
Basic micro theory and statistics.
Mission & Content Summary
MISSION
Belief formation and choice by consumers, investors, workers, etc., are key drivers of individual welfare and of the functioning of organizations and markets. The standard approach to belief formation and choice in economics and finance is rationality: beliefs are optimal given the available information and choice maximizes stable preferences. In the last 40 years this paradigm has been challenged by evidence that market participants exhibit systematic biases in belief formation and choice, and that these biases importantly shape individual welfare, organizations and markets. The mission of this course is to introduce the students to these results by presenting the main methods and findings of behavioral economics and behavioral finance.
CONTENT SUMMARY
The course covers major departures from the rational actor paradigm such as reference dependence, time inconsistency, and non rational beliefs. It connects these departures to basic cognitive functions such as selective memory and limited attention, and uses them to study actual consumer behavior and market phenomena, with a special emphasis on behavioral finance.
Intended Learning Outcomes (ILO)
KNOWLEDGE AND UNDERSTANDING
At the end of the course student will be able to...
After successful completion of the course, students will be able to understand and analyze formal models of belief formation and choice that embody major departures from rationality such as reference dependence, time inconsistency and non rational beliefs. They will also be able to apply these models to consumer behavior and market, with a special focus on financial markets, and to estimate model parameters using laboratory experiments and field data.
APPLYING KNOWLEDGE AND UNDERSTANDING
At the end of the course student will be able to...
- Look at the world from a different perspective.
Teaching methods
- Lectures
- Individual works / Assignments
DETAILS
Face to face lectures and problem sets (not graded). The lectures will be organized around puzzles and questions to which the students will be encouraged to answer, so as to generate active participation and learning. the problem sets will allow the students to practice on how to analyze the models presented during the course.
Assessment methods
| Continuous assessment | Partial exams | General exam | |
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ATTENDING AND NOT ATTENDING STUDENTS
There will be one written final exam that covers the entire course material. The exam will count for 100% of the grade. The exam will be a multiple choice questionnaire tat will test both the ability of students to analytically solve the models presented during the course as well as their knowledge and understanding of the empirical findings presente. No distinction between attending and non attending students.
Teaching materials
ATTENDING AND NOT ATTENDING STUDENTS
- N. GENNAIOLI, A. SHLEIFER, A Crisis of Beliefs, Princeton University Press, 2018.
- D. KAHNEMAN, Thinking, Fast and Slow.
- List of articles in the syllabus.
Last change 27/05/2024 12:22