Behavioral finance is a relatively new but quickly expanding field that seeks to provide explanations for people’s financial decisions by combining behavioral and cognitive psychological theory with conventional economics and finance. Neoclassical economists assume that; i) all individuals act rationally to maximize their utility for both monetary and non-monetary gains, and ii) markets are fully efficient and prices reflect all available, relevant information. However, in reality these assumptions often do not hold. Behavioral finance helps explain why and how markets might be inefficient, why people are imperfect processors of information and why they are often subject to biases, errors and perceptual illusions.

CFA exam curriculum devotes more and more weight to behavioural finance every year. Portfolio managers, investment advisors, consultants, CFOs and individual investors must have an in-depth understanding of different behavioral biases and their impacts on financial decision making.

This course aims to be a guide to understanding the fundamentals of behavioral finance and reasons and impacts of irrational investor behaviour. Throughout the course, we will cover psychological biases that effect the financial decision-making process and examine their impacts on financial markets and on people’s lives.

The course will be supported by real-life case studies, analyses of investor behaviour, cases of behavioral interventions to modify investor behaviour and interviews / Q&A sessions with investment practitioners.