Introduction to Behavioural Finance from edX

The course is aimed at beginners who want to understand the complex, yet interesting aspects of behavioural finance. The course will start with an introduction to basics of behavioural finance and how it impacts financial markets. The most common self-deception biases, cognitive biases, and emotional biases will then be discussed at length with appropriate examples and real-life case studies. We will discuss the causes and potential measures required to manage these biases. We will also discuss loss aversion and herding biases which have a great impact on the minds of investors. The course concludes with a section on the impact of unforeseen circumstances on the behavioural aspects of finance.

The course is offered by a team of experienced faculty at State Bank Institute of Consumer banking ,an Apex Training Institute of State Bank of India. Apart from Instructors, following faculty members have contributed to the content of the course.

Rabindra Kumar Mohanty

Avinash Agrawal

GV Rao

M Sai Chakradhar

What you'll learn

How wide range of decision-making biases and information processing errors impact our financial decision-making
How behavioural finance impacts financial markets
The most common self-deception biases, their causes, and potential measures to prevent them
Cognitive biases and their root causes with real life examples
The most common emotional biases and their causes with examples
How loss aversion and other biases that contribute to our financial decision- making
How herding bias and other social factors interfere with our decision-making

What's inside

Syllabus

Overview of Behavioural Finance

Entropic Mind Leading to Self-Deception

Cognitive Biases in Financial Decision Making

Emotional and Social Biases in Financial Decision Making

Good to know

Know what's good

, what to watch for

, and possible dealbreakers

Helps learners understand the complex, yet interesting aspects of behavioural finance

Suitable for beginners who want to understand the basics of behavioural finance

Provides appropriate examples and real-life case studies to explain concepts

Discusses the causes and measures to manage biases

Offered by a team of experienced faculty

Examines the impact of unforeseen circumstances on the behavioural aspects of finance

Activities

Be better prepared before your course. Deepen your understanding during and after it. Supplement your coursework and achieve mastery of the topics covered in Introduction to Behavioural Finance with these activities:

Review Statistics and Economics Fundamentals

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A refresher on statistics and economics will provide a solid foundation for understanding the quantitative aspects of behavioral finance

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Review basic statistical concepts such as descriptive statistics, probability, and hypothesis testing
Refresh your knowledge of economic principles, including microeconomics and macroeconomics
Identify online resources or textbooks to support your review
Complete practice problems to reinforce your understanding

Read 'Behavioral Finance: Psychology, Decision-Making and Markets'

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This book offers a comprehensive overview of behavioral finance, establishing a foundation for understanding the course content

View Nudge on Amazon

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Preview the chapters to gain an overview of the topics
Actively read each chapter, taking notes of key concepts
Summarize the main arguments and evidence presented
Complete the practice questions at the end of each chapter

Organize and Review Course Materials Regularly

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Maintaining an organized and regularly reviewed set of course materials will enhance your ability to retain and apply the course content

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Set aside time to review and organize notes
Summarize key concepts and highlight important sections
Create mind maps or diagrams to connect different ideas
Take practice quizzes or tests to self-assess your understanding

Five other activities

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Explore Online Resources on Behavioral Finance

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Complementing the course materials with external resources will broaden your understanding of behavioral finance and expose you to diverse perspectives

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Identify reputable websites, blogs, and online courses on behavioral finance
Explore these resources and take notes on new concepts
Apply what you learn to real-world examples
Discuss your findings with classmates or instructors

Engage in Study Group Discussions

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Peer discussions foster a deeper understanding of the course material through active engagement and diverse perspectives

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Form a study group with 2-3 peers
Choose topics for discussion based on course content
Take turns presenting and discussing different aspects of the topic
Summarize key takeaways and identify areas for further exploration

Design a Decision-Making Framework for Behavioral Biases

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This activity encourages you to critically analyze behavioral biases and create a practical tool for mitigating their impact

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Identify common cognitive biases discussed in the course
Research techniques for managing and overcoming biases
Design a step-by-step framework incorporating these techniques
Share your framework with peers for feedback

Develop an Infographic on Cognitive Biases

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Creating an infographic will help you synthesize and visually represent the key cognitive biases discussed in the course

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Gather information on different cognitive biases
Select relevant data and statistics
Design an engaging and informative infographic
Share your infographic with classmates or post it online

Solve Behavioral Finance Problem Sets

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Regular practice with these problem sets will reinforce your understanding of behavioral finance concepts and enhance your analytical skills

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Download problem sets from the course materials
Attempt to solve the problems independently
Review worked solutions to identify areas for improvement
Seek clarification from instructors or peers if needed

Career center

Learners who complete Introduction to Behavioural Finance will develop knowledge and skills that may be useful to these careers:

Behavioral Economist

Behavioral Economists apply psychological principles to understand and predict economic behavior. They study how emotions, cognitive biases, and other psychological factors influence economic decision-making. This course would be a strong foundation in behavioural finance, which is a subfield of behavioural economics.

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Portfolio Manager

Portfolio Managers manage investment portfolios for individuals or institutions, such as pension funds and endowments. They make investment decisions in accordance with their clients' financial goals and risk tolerance. Portfolio managers consider various factors when making investment decisions, including economic conditions, market trends, and company performance. This course may be particularly useful for aspiring portfolio managers, as it provides an introduction to behavioural finance and how it can impact financial markets.

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Investment Analyst

Investment Analysts analyze and recommend investments for individuals or institutions using various statistical, econometric, and qualitative data analysis techniques. They use their expertise in finance and economics to help clients make informed investment decisions. This course may be particularly helpful for aspiring investment analysts, as it provides an introduction to behavioural finance and how it can impact financial markets.

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Hedge Fund Manager

Hedge Fund Managers manage hedge funds, which are investment funds that use advanced investment strategies to generate high returns. They typically invest in a variety of assets, including stocks, bonds, and derivatives. This course may be particularly useful for aspiring hedge fund managers, as it provides an introduction to behavioural finance and how it can impact financial markets.

See salaries and explore the career path for Hedge Fund Manager

Market Researcher

Market Researchers gather and analyze data on consumer behavior and market trends. This information is then used by businesses to make informed decisions about product development, marketing campaigns, and other business strategies. This course may be useful as it provides an introduction to behavioural finance and how it can impact financial markets.

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Stockbroker

Stockbrokers help clients buy and sell stocks, bonds, and other financial securities. They work with a variety of clients, including individuals, families, and institutions. They provide advice on investments and help clients make informed financial decisions. This course may be useful as it provides an introduction to behavioural finance and how it can impact financial markets.

See salaries and explore the career path for Stockbroker

Investment Banker

Investment Bankers help companies raise capital and make mergers and acquisitions. They work with a variety of clients, including corporations, governments, and financial institutions. This course may be useful as it provides an introduction to behavioural finance and how it can impact financial markets.

See salaries and explore the career path for Investment Banker

Quantitative Analyst

Quantitative Analysts use mathematics and statistics to analyze financial data and make investment decisions. They work with large datasets and use sophisticated models to identify investment opportunities. This course may be particularly useful for aspiring quantitative analysts, as it provides an introduction to behavioural finance and how it can impact financial markets.

See salaries and explore the career path for Quantitative Analyst

Financial Analyst

Financial Analysts provide detailed financial advice to businesses. They are often hired to help businesses with financial planning, mergers and acquisitions, and stock offerings. Financial analysts use various financial models and techniques to evaluate and make recommendations on investments. This course may be helpful as it provides an introduction to behavioural finance and how it can impact financial markets.

See salaries and explore the career path for Financial Analyst

Financial Consultant

Financial Consultants advise businesses and individuals on a variety of financial matters, including mergers and acquisitions, capital raising, and financial planning. This course may be useful as it provides an introduction to behavioural finance and how it can impact financial markets.

See salaries and explore the career path for Financial Consultant

Neuroeconomist

Neuroeconomists apply brain imaging and other neuroscience techniques to understand how the brain makes economic decisions. They study how neurological processes influence economic behavior. This course may be particularly useful for aspiring neuroeconomists, as it provides an introduction to behavioural finance and how it can impact financial markets.

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Financial Advisor

Financial Advisors provide financial advice to individuals and families. They help clients with a variety of financial planning needs, such as saving for retirement, investing for the future, and managing debt. This course may be useful as it provides an introduction to behavioural finance and how it can impact financial markets.

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Risk Manager

Risk Managers assess and mitigate risks for businesses and organizations. They identify potential risks and develop strategies to minimize their impact. This course may be useful as it provides an introduction to behavioural finance and how it can impact financial markets.

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Financial Planner

Financial Planners help individuals and families manage their finances. Through basic financial planning, they help clients meet short and long-term financial goals, including retirement and education savings. More advanced financial planners may create complex financial plans for wealthy individuals. This course may be useful as it provides an introduction to behavioural finance.

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Financial Journalist

Financial Journalists write and report on financial news and events. They work for a variety of media outlets, including newspapers, magazines, and websites. This course may be useful as it provides an introduction to behavioural finance and how it can impact financial markets.

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