| Course Unit Code | Course Unit Title | Type of Course Unit | Year of Study | Semester | Number of ECTS Credits | | İŞL410.5B2 | Behavioral Finance | Elective | 4 | 8 | 5 |
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| Level of Course Unit |
| First Cycle |
| Objectives of the Course |
| This course aims to investigate psychology's contribution to finance and economics. The standard approach in finance theory is based on the assumption of rational and unemotional economic agents. However, the anomalies in the financial markets have evidenced that the decisions of investors may not be in line with this assumption, leading to inexplicable events such as bubbles. This course discusses psychological explanations for irrational financial decisions. The analysis of deviations from rationality will lead us to the predictability of financial asset price movements by employing psychological principles and explanation of real world market anomalies. Upon successful completion of this course, students will be able to understand the decision behavior of an individual investor within a market context, which can help them have a better understanding of financial market dynamics. |
| Name of Lecturer(s) |
| Dr. Öğr. Üyesi Eşref KULOĞLU |
| Learning Outcomes |
| 1 | grasp the idea of rational behaviour and efficient markets. | | 2 | understand how investors’ psychology can contradict rational decision making. | | 3 | understand how investors’ psychology and limits to arbitrage give rise to inefficient markets. | | 4 | evaluate the usefulness of traditional financial theories in explaining the behaviour of financial markets. | | 5 | understand the limits of behavioural finance. |
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| Mode of Delivery |
| Normal Education |
| Prerequisites and co-requisities |
| None |
| Recommended Optional Programme Components |
| None |
| Course Contents |
| Prospect Theory, Cognitive Dissonance, Conservatism, Ambiguity Aversion, Mental Accounting, Regret Aversion, Experimental Finance |
| Weekly Detailed Course Contents |
|
| 1 | Introduction to Behavioral Finance (Foundations of efficient market hypothesis, Conventional finance, challenges to market efficiency, limits to arbitrage) | | | | 2 | Prospect Theory | | | | 3 | Overconfidence - Representativeness | | | | 4 | Anchoring and Adjustment - Cognitive Dissonance | | | | 5 | Availability - Self- Attribution | | | | 6 | Illusion of Control - Conservatism | | | | 7 | Ambiguity Aversion - Endowment | | | | 8 | Self-Control - Optimism | | | | 9 | Mid-Term Exam | | | | 10 | Mental Accounting - Confirmation | | | | 11 | Money Illusion - Hindsight | | | | 12 | Loss Aversion - Recency | | | | 13 | Regret Aversion - Framing - Status Quo | | | | 14 | Experimental Finance | | | | 15 | Experimental Finance | | | | 16 | Final exam | | |
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| Recommended or Required Reading |
| Hakan ÖZEROL, Davranışsal Finans, Elma Yayınevi, Ankara, 2011.
DanieI KAHNEMAN, Amos TVERSKY, Prospect Theory: An Analysis of Decision Under Risk, Econometrica 47, 263-291, 1979. |
| Planned Learning Activities and Teaching Methods |
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| Assessment Methods and Criteria | |
| Midterm Examination | 1 | 100 | | SUM | 100 | |
| Final Examination | 1 | 100 | | SUM | 100 | | Term (or Year) Learning Activities | 40 | | End Of Term (or Year) Learning Activities | 60 | | SUM | 100 |
| | Language of Instruction | | Turkish | | Work Placement(s) | | None |
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| Workload Calculation |
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| Midterm Examination | 1 | 1 | 1 |
| Final Examination | 1 | 1 | 1 |
| Attending Lectures | 14 | 3 | 42 |
| Self Study | 14 | 3 | 42 |
| Individual Study for Mid term Examination | 1 | 25 | 25 |
| Individual Study for Final Examination | 1 | 30 | 30 |
| Homework | 9 | 1 | 9 |
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| Contribution of Learning Outcomes to Programme Outcomes |
| LO1 | 2 | 1 | 2 | 2 | 1 | 3 | 2 | 3 | 3 | 3 | | LO2 | 3 | 3 | 2 | 2 | 1 | 2 | 1 | 2 | 3 | 1 | | LO3 | 2 | 2 | 1 | 3 | 2 | 2 | 2 | 3 | 2 | 3 | | LO4 | 1 | 2 | 2 | 1 | 1 | 4 | 2 | 4 | 4 | 3 | | LO5 | 3 | 2 | 1 | 2 | 1 | 4 | 1 | 3 | 4 | 4 |
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| * Contribution Level : 1 Very low 2 Low 3 Medium 4 High 5 Very High |
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