CURRICULUM

The program curriculum employs an interactive lecture format. Through lectures, class discussions, and guest presentations, participants will explore the many facets of behavioral finance and its ramifications for making informed investment decisions. 

View the schedule of last year's program.

Presentations and class subject matter may change from session to session in order to present the most up-to-date research and current issues in the financial markets.

Recent session topics have covered:

On Behavioral Economics, Financial Decision Traps, and Systematic Irrationalities
This is an introduction to the science of behavioral economics and its application to financial management. It explores how behavioral approaches to the market differ from so-called conventional or “rational” approaches.

The Psychology of Individual Investment Decision-Making
The conventional wisdom about investment risk is that it is a function of the age, wealth, income requirements, and time horizons of the investor, and that investment managers need only to determine the appropriate level of risk for the client, matching the portfolio to it. In fact, extensive behavioral research shows that risk attitudes derive from overestimating (bold forecasting) or underestimating (timid decisions). We will examine the implications of this research for financial managers.

Managing and Investing Rationally in an Irrational World
This presentation discusses behavioral finance versus standard finance. Research suggests that standard finance is based on incorrect assumptions and fails to capture the basic facts about financial markets. We will explore the most serious deficiencies in the standard view of financial markets and practices, including myopic loss and the equity premium puzzle, and applying behavioral investment strategies to corporate finance.

How to Deal With and Use Overreaction and Underreaction: Basic Nonrationalities in Stock Prices
Empirical research in finance has uncovered two broad classes of irrational tendency in stock prices: overreaction and underreaction. Each tendency has specific characteristics that allow it to be identified and each has given birth to a corresponding behavioral economic strategy for investing. Understanding these phenomena provides the basis for contrarian strategies.  Such strategies provide superior returns which can be explained by systematic overvaluation of the “best” stocks and undervaluation of the “worst” stocks.

Investing in the Unknown and the Unknowable
The major profit opportunities in the modern world come from investing where professional analysts fear to tread, hence there is modest competition from the investment community.  Often this entails “sidecar” investments, where your special relationships with knowledgeable others enable you to be pulled along by a powerful “motorcycle.” Many such highly profitable investments will be in illiquid assets.   

Confessions of a Value Manager
This presentation examines global investment strategy in relation to investor psychology. It also includes practical lessons for current markets.

Undersaving and Underinvesting
This session explains the psychological phenomena which cause many U.S. households not to save enough for retirement. It explores how bounded rationality, problems of self-control, and overzealous optimism affect household savings and national savings policy and how defined-contribution savings, like 401K plans, partially overcome these problems.