Behavioural Economics and Behavioural Finance

Wirtschafts- und Sozialwissenschaften

Version 7.0 vom 10.02.2023

22B1195

Behavioural Economics and Behavioural Finance

• Gaststudierende (B.A.)
• Volkswirtschaftslehre (B.A.)

2

Economic theory is built upon a theory of human behaviour. The traditional, axiomatic model of rational utility maximization that still dominates textbook economics, however, needs to be qualified in the light of overwhelming empirical evidence of irrational and non-selfish behaviour by economic agents. In this module, students will reflect on the crucial importance of behavioural theories for economics and finance and they will learn about alternative, empirically substantiated models of human behaviour.

1. Axioms of neoclassical economics (rational utility maximization): theory, critique and implications
2. Behavioural Economics
   2.1 Qualifications of rationality: empirical evidence on irrational behaviour and alternative models and their applications
   2.2 Qualifications of independent preferences: herding and bandwagon effects, social comparison
   2.3 Qualifications of selfishness: fairness and commitment; evidence and interpretations from game-theory
3. Behavioural Finance
   3.1 Traditional Capital Market Theory: Efficient Capital Markets, Portfolio Selection, Capital Asset Pricing Model (CAPM)
   3.2 Irrational behaviour of investors
   3.2.1 Cognitive restrictions
   3.2.2 Emotions and financial decisions
   3.2.3 Group dynamics and financial decisions

Wissensverbreiterung
Students broaden their knowledge of economic and financial theory and become familiar with models of human behaviour that are more differentiated than the standard model.
Wissensvertiefung
They recognize to what extent behavioural economics and behavioural finance insights can complement and qualify textbook economic theory.
Können - instrumentale Kompetenz
They are able to carry out economic analyses and economic policy evaluations with regard to behavioural economics and behavioural finance insight. They are in a better position to predict behavioural effects for the economy and financial markets. They are able to devise effective strategies and solutions to economic problems.
Können - kommunikative Kompetenz
They can explain economic phenomena that appear paradoxical or irrational in a traditional perspective.
Können - systemische Kompetenz
They are able to employ a richer toolbox of economic methods in order to arrive at more differentiated assessments of economic situations and problems.

Lectures, presentations, case studies, group work

Basic knowledge of Economics

Hirata, Johannes

• Adam, Hans
• Berger, Hendrike
• Hirata, Johannes
• Mayer, Peter
• Trabold, Harald
• Seppelfricke, Peter

5

Ariely, D.: Predictably Irrational: The Hidden Forces That Shape Our Decisions (2009)Hens, Thorsten; Bachmann, Kremena: Behavioural Finance for Private Banking (2008)Kahneman, D.: Thinking, Fast and Slow (2011)Schwartz, B.. The paradox of choice: Why more is less. (2005)Shleifer, Andrei: Inefficient Markets: An Introduction to Behavioral Finance (2009)Thaler/Sunstein: Nudge (2009)

• Klausur 2-stündig
• Portfolio Prüfung

Die Portfolioprüfung umfasst insgesamt 100 Punkte und besteht aus einer einstündigen Klausur (K1) sowie einer Hausarbeit (HA). Jedes der zwei Elemente wird mit 50 Punkten gewichtet.

1 Semester

Nur Sommersemester

Englisch