Course Behavioral Finance(3 days)

Course outline and objectives

Behavioral finance aims at improving our understanding of financial decisions and how they affect market prices and asset returns, by applying insights from psychology and other behavioral sciences. Traditionally, the finance paradigm seeks to understand financial decisions by building on optimal acting investors and market forces that correct mispricing; that is, it assumes people behave rational. However, abundant evidence, reveals that this traditional paradigm is too restrictive and often gives a poor description of people’s behavior.
We (being people) do not always act in the best way possible. In fact, in many decision situations we make mistakes that result in non-optimal behavior. What are these mistakes (or biases), what are their consequences, how can we recognize them, and how can we prevent them? Using interactive sessions, this course will examine various influential behavioral biases, how sensitive you are to these biases, and their implications for financial markets and decisions, like investments, insurance and housing. Further, participants will acquire a series of skills to identify these behavioral influences in both their own and others’ lives, and considers ways to overcome them in real-life. In addition, the course will also consider how behavioral principles can turn into a profit by studying how behavioral biases affect markets and developing trading strategies based upon them.

Who should attend?

The course is of high interest and relevance for regulators and investment professionals, including private bankers, investment bankers, traders, asset managers, researchers, analysts, pension board members, consultants, economists, and financial advisors, but also for corporate executives, individual investors and high net-worth individuals, who like to know more about Behavioral Finance, its impact on everyday situations and how to use its knowledge to your advance.

Program content

Day 1

  • What is Behavioral Finance?
  • Introducing the traditional finance paradigm
  • The building blocks of Behavioral Finance
  • Bounded rationality, rules-of-thumb, mental accounting and investor’s portfolios
  • Applications to financial decisions and markets

Day 2

  • Main psychological phenomena that influence how people interpret information and form expectations
  • Applications to financial decisions and markets
  • Investor’s risk, uncertainty, time preferences and its biases
  • The effects of mood and emotions
  • Applications to financial decisions and markets

Day 3

  • Avoiding the behavioral pitfalls and learning
  • The efficient market hypothesis; why would the various behavioral influences market prices?
  • Limits to arbitrage
  • Behavioral Finance investing
  • Final review

Schedule

The course  is scheduled from 9:00am to 4:00pm, June,  2016. Exact date will be announced

Course fee

Course fee: 2350 € (Euro), VAT-free

Location

Amsterdam

Language

English language is the working language of the course.

About the lecturer

Guido Baltussen is an expert in Behavioral Finance. He holds an Ast. Professor positions in Finance at the Erasmus University Rotterdam and is a full research fellow of the Tinbergen Institute and Erasmus Research Institute of Management (ERIM). In addition, he works as investment strategist at ING Investment Management, where he applies his Behavioral Finance knowledge to investment decisions and strategies. Before, he obtained his PhD in Finance at the Erasmus University Rotterdam, and worked at Stern School of Business of New York University, New York, USA. Guido published several articles in the world-leading economic and finance journals (American Economic Review, Management Science, Journal of Financial and Quantitative Analysis, Experimental Economics, Financial Analyst Journal), his research is covered in various media and Guido ranks among the top 1% of authors with most downloads on SSRN. Moreover, Guido regularly writes 'Behavioral Finance' columns for the popular Dutch investment website IEX.nl, and is managing partner of the statistical and economic consultancy and training bureau Tridata.