Behavioural Finance

This course is designed to provide a forum & create awareness about an emerging area in the world of finance and also intends to complement other finance courses that are mainly based on the traditional paradigm which assumes that investors and managers are generally rational. It also provides an overview of an exciting new and fast-growing area in the field of management, which takes as its premise that investment decision-making and investor behaviour are not necessarily driven by 'rational' considerations but by aspects of personal and market psychology. Behavioural finance recognizes that our abilities to make complex decisions are limited due to the biases and errors of judgment to which all of us are prone. This course will introduce you to cognitive biases, emotional biases & heuristics and discuss the impact of such biases on business & financial decision-making. Objective: The broad objective of the Course is to provide an opportunity for the participants to learn concepts, models and methodologies of Behavioural Finance and Investment Management. Specifically, this course has three main objectives. •First, we aim to examine how the insights of behavioural finance theories shed light on the behaviour of individual investors and finance professionals in investment decision-making and corporate financial decision-making. •Second, we explore the possibility of improving investment performance and corporate performance by recognizing the cognitive biases and applying appropriate 'de-biasing' techniques. •Finally, we investigate the implications of behavioural finance for the construction of good corporate governance mechanisms.