"G. d'Annunzio"
The course integrates the knowledge on the "orthodox" economic and financial theories, which presuppose the unbounded rationality of the decision maker, with the evidence of behavioral and cognitive research on decisional processes in conditions of uncertainty. EXPECTED LEARNING RESULTS At the end of the course students will have knowledge and understand the aspects related to Economics and Behavioral Finance. In particular students: - must have acquired specialist knowledge related to the main reference literature; - will have to know the main empirical evidence that led to the establishment and development of the discipline; - will have to be able to discuss one of the scientific artioli that are at the base of the reference literature; - will have to be able to replicate a behavioral experiment.
The course presents the contribution to the "orthodox" economic and financial theory obtained thanks to the "behavioral" approach. In this perspective the following topics will be discussed: a) Empirical evidence on market efficiency; b) Factors that influence the markets; c) Decision making and bisystemic theory; d) Heuristics and bias; e) Overconfidence; f) Value theory and choices; g) Mental accounting and self-control; h) Nudging; i) Decisions under conditions of uncertainty.
• "Orthodox" economic and financial theory (outline) • Empirical evidence on market efficiency. • Factors that influence the markets o Structural factors o Cultural factors o Psychological factors • Decision making and bisystemic theory o Attention and effort o The associative mechanism o Cognitive fluidity o Norms, surprises and causes o A mechanism to jump to conclusions o How judgments are formed o Answer an easier question • Heuristics and bias o The law of small numbers o Anchors o The science of availability o Availability, emotion and risk o Conjunction fallacy or Less s more o Stereotypes o The regression towards the average • Excessive security o The illusion of understanding o The illusion of validity o Insights against formulas o Expert intuition o External vision o Optimism • Value theory and choices o The Bernoulli theory or La Prospect Theory o The endowment effect o Negative events o The 4-cell scheme o Rare events o Risk policies o Inversions o Frame and reality • The two selves • Mental accounting and self-control • The nudging • Decisions under conditions of uncertainty.
recommended readings: • D. Kahneman, Pensieri lenti e veloci, Mondadori, 2012 • R. Thaler, Misbehaving: The Making of Behavioral Economics, 2015;
Frontal lessons; discussion of scientific articles and participation in laboratory activities for economics and behavioral finance experiments; drafting a project work.
The verification of the students' preparation will take place through the discussion of a scientific article; the discussion of a project work and a colloquium. The final mark will be expressed in thirtieths. The topics under examination will reflect those dealt with during the course and present in the program.
