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IKT 466 - Behavioral Finance

Faculty of Business and Management Sciences · Islamic Economics and Finance (English) · Undergraduate

ECTS: 5 T+P+L: 3+0+0 University Elective
Coordinator: Dr. Öğr. Üyesi Merve Büşra ALTUNDERE DOĞAN

Course Objective

The objective of this course is to familiarize students with the fundamental principles and theories of behavioral finance, facilitating their understanding of why individuals frequently make irrational financial decisions.

Course Content

In this course, we will examine the difference between traditional financial theories and the complexity of the real financial world. Throughout the course, we will discuss various heuristics and biases such as framing effect, ambiguity aversion, diversification heuristic, familiarity, and herding behavior. Using real-life examples, we will explore how psychological factors influence investment decisions, asset pricing, and market dynamics.

Required Resources

  • Ackert & Deaves (2010). Behavioral Finance: Psychology, Decision-making, and Markets. Cengage Learning.
  • Thaler & Sunstein (2008). Nudge. London: Penguin Books.

Recommended Resources

  • Shleifer (2000). Inefficient Markets. Oxford University Press.
  • Kahneman (2013). Thinking, Fast and Slow. 1st Ed. NY: Farrar, Straus, and Giroux.
  • Thaler (2016). Misbehaving: The Making of Behavioral Economics. W. W. Norton & Company.

Explanations

Attendance is considered an essential aspect of this course. The material covered in lectures will be a subject of evaluation, and while some topics are available in the textbook, others are exclusive to the lectures. Hence, students are strongly recommended to attend all class meetings regularly and on time. Your punctuality is not only expected but also appreciated.

Rules

​This course has a zero-tolerance policy for cheating and plagiarism. Students found engaging in such behavior will face severe consequences, including course failure and disciplinary actions. Cheating involves deceit, fraud, or dishonesty, especially during examinations, while plagiarism is the misrepresentation of someone else’s work as your own.

Course Learning Outcomes

  1. Students will acquire a foundational understanding of behavioral finance.
  2. Students will discuss common cognitive biases and heuristics affecting financial decision-making.
  3. Students will explain emotional dimensions of investment decisions.
  4. Students will discuss various market anomalies challenging traditional financial theories.

Core Area Distribution

(31) Social and Behavioural Science%40 (34) Business and Administration%60

Teaching Methods

ExpressionDiscussionGroup StudySelf studyProject Based Learning (Including Field Work)

Assessment & Evaluation

Performance Assignment ( Lab / Workshop / Field Work / Seminar / Presentation / Completion Study / ThesisProject / DesignTesting (Essay / Tests: True-Falls, multiple-choice, short answer, matching)

ECTS / Workload

ActivityQuantityDuration (h)Total Workload
Course Duration (Including Exam Week)14342
Out of Class Study Period14228
Midterm000
Quiz000
Assignment155
Practice12222
Final12828

Course Schedule

WeekSubjectPreparation
1Introduction to CourseAD, 2010
2Foundations of FinanceAD, 2010, Ch1
3Foundations of FinanceAD, 2010, Ch2
4Prospect TheoryAD, 2010, Ch3
5Market EfficiencyAD, 2010, Ch4
6Heuristics and BiasesAD, 2010, Ch5
7Overconfidence, and EmotionsAD, 2010, Ch6-7
8Midterm Exam Week---
9Investor Behavior: Heuristics and BiasesAD, 2010, Ch8
10Investor Behavior: Heuristics and BiasesAD, 2010, Ch8
11Investor Behavior: Overconfidence, and EmotionsAD, 2010, Ch9
12Investor Behavior: Overconfidence, and EmotionsAD, 2010, Ch10
13Social ForcesAD, 2010, Ch11
14Social ForcesAD, 2010, Ch12
15Group Project PresentationsStudy for Project
16Final ExamStudy for Exam