Behavioral Finance: Psychology of Financial Decision-Making

Explore psychology and finance, delving into behavioral biases and decision-making processes shaping financial markets

Created by: EDUCBA Bridging the Gap
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What Will I Learn?

• Behavioral Finance Fundamentals: Understand the basics of Behavioral Finance, differentiating it from Traditional Finance.
• Utility and Bayes Theory: Explore utility theory, axioms, Bayes theory, and its application to economic decision-making.
• Rational Economic Decision-Making: Analyze the concept of rational economic decision-making and risk aversion among investors.
• Prospect Theory and Market Efficiency: Delve into prospect theory, efficient market hypothesis, market anomalies, and forms of market efficiency.
• Portfolio Construction: Gain insights into traditional perspectives of portfolio construction, consumption, and savings models.
• Behavioral Asset Pricing and Portfolio Theory: Study behavioral asset pricing models and behavioral portfolio theory.
• Cognitive and Emotional Biases: Identify and understand cognitive errors, emotional biases, and their impact on decision-making.
• Behavioral Investment Strategies: Explore goals-based investing, behaviorally modified asset allocation, and various models like Barnewall Two Way, BBK Five Way
• Limitations and Critiques: Analyze limitations of behaviorally modified asset allocation, biases in analyst forecasts, and the role of investment committees.
• Advisor-Client Dynamics: Examine the advisor-client relationship, portfolio construction considerations in DC plans and the influence of management on analysis
• Market Anomalies and Investment Strategies: Explore market anomalies, value and growth anomalies, and their implications for investment strategies

Requirements

• No prerequisites

Target audience

• Finance professionals and analysts seeking a deep understanding of Behavioral Finance principles.
• Financial advisors aiming to incorporate behavioral insights into their client interactions and portfolio management.
• Individuals interested in exploring the psychological factors shaping financial decision-making.
• Intermediate to advanced learners in finance looking to enhance their expertise in investment strategies and market behavior.
• Professionals engaged in investment management roles and decision-making within financial markets.
• Those who want to gain insights into the cognitive and emotional biases influencing financial choices.