Behavioral finance is the study of the influence of psychology on the behavior of financial practitioners. In the course, you will learn about the wide range of decision-making biases and information processing errors that influence our financial decision-making. We’ll start the course with what behavioral finance is and its impacts on financial markets. We will then explore the most common self-deception biases, cognitive biases, and emotional biases. We will discuss their causes and potential measures you can take to manage them. We’ll finish the course by discussing loss aversion and herding bias.

Topics Include:

• Self-Deception Biases
• Overview of Behavioural Finance Biases
• How Self-Deception Biases Impact Decision Making in Finance
• Optimism Bias
• Overconfidence Bias
• Compare Financial Models
• Cognitive Biases
• Emotional Biases
• Social Biases

This course includes a quiz that you can attempt multiple times. To ensure that your understanding of the material is accurately assessed, the correct answers will not be shown after each attempt.

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Upon completing this course, you will be able to:

• Understand what behavioral finance is, how it differs from modern finance, and how it impacts financial markets.
• Describe the most common self-deception biases, their causes, and potential measures you can take to prevent them.
• Understand cognitive biases and explore their root causes with real-life examples.
• List the most common emotional biases and discuss their causes with examples.
• Understand loss aversion and other biases that contribute to its effect.
• Study the herding bias and other social factors that distort decision-making.