Behavioral Aspects in Financial Market Decision-Making 2600-DIzABkf
1. Multifaceted perspectives on behavior in the world of finance – beyond the problem of rationality
o Traditional versus behavioral perspectives on finance
o Financial psychology as a synthesis of traditional and behavioral approaches
o Finance from the perspective of discursive psychology: rhetoric of financiers and financial literature
o Market behavior during the Covid-19 pandemic
2. Selected psychological aspects of financial decision-making and behavior
o Heuristics and cognitive biases
o Prospect theory and its critique
o Rumor and panic in the functioning of financial institutions
o The Pygmalion effect in financial markets
o Psychosocial mechanisms of speculative bubbles
3. Behavioral finance models
o Fundamental models: DSSW, LSV, investor sentiment model, DHS, behavioral portfolio model, HS
o Models based on types of analysis
o Models addressing investor situations and behavior
o Models incorporating earnings forecasts
o Models applying probability distributions
o Herding behavior models
o Other selected mainstream behavioral finance models
o Behavioral finance models emerging from Critical Management Studies (CMS)
o Outline of an interpretive model incorporating a historical perspective (inspired by David Orrell’s propositions)
4. Event study as a method of testing behavior in behavioral finance
5. Modeling the Polish financial market
Type of course
Mode
Course coordinators
Learning outcomes
After completing the course, the student will have acquired:
Knowledge
• possesses in-depth knowledge of classical and behavioral approaches to finance and is familiar with basic and advanced behavioral finance models, including their limitations (K_W01).
• understands the psychological and social determinants of investment decisions, including the role of heuristics, cognitive biases, emotions, and social processes (K_W05).
• knows the principles of creating and developing different forms of entrepreneurship in both national and global contexts (K_W07).
Skills
• is able to apply behavioral finance theory to identify, diagnose, and solve problems related to financial decision-making in investment advisory and capital markets (K_U01).
• can correctly interpret complex processes and phenomena related to behavioral aspects and assess their impact on financial decisions in organizations, organizational functioning, and the economy as a whole (K_U02).
• is able to formulate and test hypotheses related to behavioral finance theories (K_U04).
• can propose solutions to tasks situated in unpredictable market conditions (K_U05).
• is able to independently and collaboratively prepare analyses, diagnoses, and reports on complex and atypical problems related to investment advisory and capital markets, particularly those connected to behavioral aspects; can present them clearly to diverse audiences and conduct debates, also in English, using advanced ICT tools (K_U06).
Social Competences
• critically analyzes phenomena occurring in financial markets, taking into account social, psychological, and ethical contexts (K_K01).
• appreciates the importance of interdisciplinary knowledge (economics, finance, psychology, sociology) in studying and interpreting complex financial processes (K_K02).
• is ready to initiate actions and propose solutions that promote responsible behavior in financial markets and serve the common good (K_K03).
Assessment criteria
Final Project based on market data prepared according to the instructor’s guidelines (90%).
Active Participation (10%).
The final grade will be based on a maximum of 100 points obtained during the seminar:
• 0–50 points – grade 2 (fail)
• 51–60 points – grade 3 (satisfactory)
• 61–70 points – grade 3.5 (satisfactory plus)
• 71–80 points – grade 4 (good)
• 81–90 points – grade 4.5 (good plus)
• 91–100 points – grade 5 (very good)
Practical placement
Internships are not required to complete the course.
Bibliography
P. Chodnicka-Jaworska, P. Jaworski, Wrażliwość rynku akcji na publikacje danych rynkowych w czasie pandemii COVID-19, Wydawnictwo Naukowe Wydziału Zarządzania UW, 2020;
P. Chodnicka-Jaworska, Credit rating na rynku finansowym, PWE, 2019;
K. Cuthbertson, D. Nitzsche, Quantitative Financial Economics: Stocks, Bonds and Foreign Exchange, 2nd Edition, Wiley, 2004.
A. Szyszka, Finanse behawioralne: Nowe podejście do inwestowania na rynku kapitałowym, Wydawnictwo Uniwersytetu Ekonomicznego w Poznaniu, Poznań 2009;
P. Zielonka, Behawioralne aspekty inwestowania na rynku papierów wartościowych, CeDeWu, Warszawa 2008;
M. Czerwonka, B. Gorlewski, Finanse behawioralne. Zachowania inwestorów i rynku, Wydawnictwo SGH, Warszawa 2008.
Additional information
Additional information (registration calendar, class conductors, localization and schedules of classes), might be available in the USOSweb system: