SEEM5370 Topics in Behavioral Finance and Economics

Behavioral finance/economics is a relatively new field, which assumes economic agents to be irrational, in contrast to the rational assumption in neoclassical finance/economics. In this course, I introduce the history of behavioral finance and economics, and the recent development and potential research topics in this field. I will first introduce the foundation of neoclassical finance, portfolio selection and asset pricing models in neoclassical finance, and empirical evidence that is inconsistent with models in neoclassical finance. Then, I will introduce the basic principles of behavioral finance/economics, portfolio selection and asset pricing problems in neoclassical finance and new approaches to these problems, and empirical studies that are consistent with models in behavioral finance/economics. In addition to the recent development in behavioral finance/economics, I will also propose a variety of open research problems in this field.