Syllabus

Title
4942 S4INTF1/2 Financial Decision-Making
Instructors
Assoz.Prof Dr. Anna Gunnthorsdottir
Contact details
  • Type
    PI
  • Weekly hours
    2
  • Language of instruction
    Englisch
Registration
02/04/19 to 02/24/19
Registration via LPIS
Notes to the course
Subject(s) Master Programs
Dates
Day Date Time Room
Saturday 05/18/19 11:00 AM - 05:00 PM D4.0.136
Wednesday 05/22/19 04:30 PM - 08:00 PM D4.0.136
Saturday 05/25/19 11:00 AM - 05:00 PM D4.0.136
Wednesday 05/29/19 04:30 PM - 08:00 PM D4.0.136
Saturday 06/01/19 11:00 AM - 05:00 PM D4.0.136
Wednesday 06/05/19 04:30 PM - 08:00 PM D4.0.136
Tuesday 06/18/19 09:00 AM - 11:00 AM D5.0.001

Contents

 

Science: From the mid-1990s, economists inspired by psychologists started exploring the true nature of economic and later financial, decisions. Discoveries about how humans make decisions undermined but also enriched the traditional model of the rational, self-interested decision-maker. Researchers started to examine cognitive limitations, social aspects of decision-making, the impact of emotion (such as fear and greed) and many other ways in which humans fail to make optimal economic decisions. Behavioral Economics, Behavioral Finance, and Strategic Thought emerged as new disciplines. They are now about to link up with economic history and political economy. -Why? It’s because humans are an evolved species with a specific (and limited) behavioral repertoire that, generation after generation, is bound to repeat the same mistakes when it comes to money, strategic decision-making, and most other things.

The 2008 financial crisis moved this new research into main stream. Experts in finance and economics turned to behavioral and historical perspectives to understand why it had happened yet again: Why economic systems go through bubbles and crashes and will do so in the future.

A novel and still fringe (but promising) topic in decision-making is intuition for which there is now sound scientific evidence, and which can be very helpful in competitive environments.

 

Practice: Discoveries of systematic human decision flaws have impacted governance, strategy, management and finance. High-level decision-makers and those who inspire to such positions increasingly realize that technical (e.g. mathematics, accounting) skills or knowledge (e.g., familiarity with regulations or law) are of limited use unless their thinking and decision-making is unbiased, and free from irrelevant emotion and herd behavior. Fortunately, we increasingly know how to correct, or at least improve, economic decisions. Additionally, humans as a species have a specific set of behavioral tendencies: knowing the mistakes others tend to make allows an informed agent (including yourself if you so choose) to exploit their weaknesses for a competitive advantage.

 

Learning outcomes

· Analyze your own decisions and identifying strengths and weaknesses

· Control the emotional aspects of decisions

· Understand the role of intuition, and develop your own intuition

· Influence others’ decisions

· Understand individual differences in decision-making

· Manage group decisions

· Understand how politics is played: play yourself, defend against it or avoid it

· Understand the intellectual challenges money has historically posed to humans

· Strategize around market bubbles and other mass phenomena

· Understand why economic history tends to repeat and will continue to do so

· Detect future social and economic trends with scenario planning

Attendance requirements

Full class attendance is required.

Teaching/learning method(s)

The topics are covered through readings, lectures, class discussions, psychological tests, decision exercises, in-class competitions for grades and real money, and teamwork. The class is interactive: students are expected to contribute to each other’s learning.

Assessment

Class participation (not just the required attendance but active participation and an occasional brief homework assignment).

Two papers due before formal classes start in May.

Exam about a book on financial history (there is some choice; see syllabus that will be sent out at the start of the semester to registered students) in the first class in May.

During the formal class period regular multiple-choice quizzes to ensure that everybody keeps up.

A brief multiple-choice final exam toward the end of June.

For due dates and details of assignments see the syllabus that will be mailed out to registered students.

Readings

1 Author: links to readings
Title:

 link to OneDrive Folder containing the readings (chapters, articles) will be provided to registered students.

Students choose one of 4 books on financial history and take an exam regarding its contents. Further details will be provided in the syllabus that will be mailed out to registered students.


Recommended previous knowledge and skills

intermediate statistics

Availability of lecturer(s)

by email or appointment

Last edited: 2019-01-07



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