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Emma Rasiel
and
John Forlines III
We make thousands of decisions every day. Do I cross the road now, or wait for the oncoming truck to pass? Should I eat fries or a salad for lunch? How much should I tip the cab driver? We usually make these decisions with almost no thought, using what psychologists call “heuristics” – rules of thumb that enable us to navigate our lives. Without these mental shortcuts, we would be paralyzed by the multitude of daily choices. But in certain circumstances, these shortcuts lead to predictable errors – predictable, that is, if we know what to watch out for. Did you know, for example, that we are naturally biased towards selling investments that are doing well for us, but holding on to those that are doing poorly? Or that we often select sub-optimal insurance payment plans, and routinely purchase insurance that we don’t even need? And why do so many of us fail to enroll in our employer’s corporate retirement plans, even when the employer offers to match our contributions?
Read more
We make thousands of decisions every day. Do I cross the road now, or wait for the oncoming truck to pass? Should I eat fries or a salad for lunch? How much should I tip the cab driver? We usually make these decisions with almost no thought, using what psychologists call “heuristics” – rules of thumb that enable us to navigate our lives. Without these mental shortcuts, we would be paralyzed by the multitude of daily choices. But in certain circumstances, these shortcuts lead to predictable errors – predictable, that is, if we know what to watch out for. Did you know, for example, that we are naturally biased towards selling investments that are doing well for us, but holding on to those that are doing poorly? Or that we often select sub-optimal insurance payment plans, and routinely purchase insurance that we don’t even need? And why do so many of us fail to enroll in our employer’s corporate retirement plans, even when the employer offers to match our contributions?
Read more
We make thousands of decisions every day. Do I cross the road now, or wait for the oncoming truck to pass? Should I eat fries or a salad for lunch? How much should I tip the cab driver? We usually make these decisions with almost no thought, using what psychologists call “heuristics” – rules of thumb that enable us to navigate our lives. Without these mental shortcuts, we would be paralyzed by the multitude of daily choices. But in certain circumstances, these shortcuts lead to predictable errors – predictable, that is, if we know what to watch out for. Did you know, for example, that we are naturally biased towards selling investments that are doing well for us, but holding on to those that are doing poorly? Or that we often select sub-optimal insurance payment plans, and routinely purchase insurance that we don’t even need? And why do so many of us fail to enroll in our employer’s corporate retirement plans, even when the employer offers to match our contributions?
Behavioral finance is the study of these and dozens of other financial decision-making errors that can be avoided, if we are familiar with the biases that cause them. In this course, we examine these predictable errors, and discover where we are most susceptible to them. This course is intended to guide participants towards better financial choices. Learn how to improve your spending, saving, and investing decisions for the future.
Register for this course and see more details by visiting:
OpenCourser.com/course/ozw6zx/behavioral
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What's inside
Syllabus
Week 1
Welcome to the course! In this first week, we'll look at the classical economic model of consumer choice, which assumes that all of the decisions that we make are sensible, or “rational.” Once we have examined the underlying theory of how people should behave (especially around financial decisions), we will move on to examine how people do behave. We will focus in particular on situations in which we are most inclined to make decisions that appear to defy rational choice axioms.
Read more
Syllabus
Week 1
Welcome to the course! In this first week, we'll look at the classical economic model of consumer choice, which assumes that all of the decisions that we make are sensible, or “rational.” Once we have examined the underlying theory of how people should behave (especially around financial decisions), we will move on to examine how people do behave. We will focus in particular on situations in which we are most inclined to make decisions that appear to defy rational choice axioms.
Read more
Week 2
Welcome to the second week. In this session, we will discover how our minds are inclined to distort probabilities, and either underestimate or overestimate the likelihood of certain outcomes. We’ll also learn about “heuristic-driven bias”: the tendency to use rules of thumb that simplify the process of making decisions, but can also lead to predictable errors. These biases negatively affect our decision-making far more than we might expect; especially when the outcome of the decision has great significance for us.
Week 3
In the final week of the course, we will see multiple examples of how mental heuristics can lead us to make predictably sub-optimal financial decisions, both individually and across the entire financial markets. We will also discuss the many ways in which you can now improve your financial decision-making because of your deeper understanding of the innate biases that have tripped you up in the past!
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Know what's good ,
what to watch for , and
possible dealbreakers
Demystifies heuristics and cognitive biases that impede financial decision-making
Leads learners towards smarter financial decision-making
Optimizing spending, saving, and investing decisions for the future
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Reviews summary
Well-received behavioral finance course
Learners say that Behavioral Finance is a well-structured course. They mention that the lectures are engaging and informative. Several learners mention that the course provides a comprehensive overview of the subject.
Well-structured
"Overall, the course was well-structured and easy to follow."
"The course was well-structured and provided a comprehensive overview of behavioral finance."
Engaging and Informative
"The lectures were well-organized and engaging."
"The lectures were informative and helped me to understand the concepts of behavioral 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 Behavioral Finance with these
activities:
Online Probability and Statistics Review
Show steps
Take an online tutorial on probability and statistics to strengthen your foundation in these areas.
Browse courses on
Probability
Show steps
-
Identify a reputable online tutorial on probability and statistics.
-
Create a schedule for completing the tutorial.
-
Complete the tutorial, taking notes and working through any practice problems.
-
Review the material regularly to retain the information.
Read 'Thinking, Fast and Slow' by Daniel Kahneman
Show steps
Read the seminal work in behavioral finance that will provide a comprehensive overview of the concepts we will explore in this course.
View
Noise: A Flaw in Human Judgment
on Amazon
Show steps
-
Purchase or borrow the book.
-
Create a reading schedule.
-
Read the book, taking notes and highlighting important passages.
-
Summarize the key concepts in your own words.
Review Heuristics and Biases
Show steps
Review the concepts of heuristics and, using the resources provided in Week 1, review examples to build intuition.
Browse courses on
Heuristics
Show steps
-
Read the course syllabus, especially Week 1 materials.
-
Review the resources provided in Week 1 on heuristics and biases.
-
Create flashcards to memorize key concepts and examples.
Five other activities
Expand to see all activities and additional details
Show all eight activities
Join a Study Group or Online Forum
Show steps
Connect with peers to discuss the course material, share insights, and support each other's learning.
Show steps
-
Identify potential study groups or online forums related to behavioral finance.
-
Join a group that aligns with your learning goals and schedule.
-
Actively participate in discussions, ask questions, and share your own perspectives.
-
Take advantage of opportunities to collaborate on projects or assignments.
Practice Applying Heuristics and Biases to Financial Scenarios
Show steps
Complete practice exercises and simulations to sharpen your ability to recognize and mitigate financial biases.
Show steps
-
Identify online resources or textbooks with practice problems.
-
Set aside time for regular practice sessions.
-
Work through the practice problems, analyzing the scenarios and identifying the relevant biases.
-
Review your answers and seek feedback from peers or instructors.
-
Repeat the practice until you feel confident in your ability to apply the concepts.
Learn a Programming Language for Financial Data Analysis
Show steps
Develop proficiency in a programming language to analyze financial data and gain insights not readily available through manual methods.
Browse courses on
Python
Show steps
-
Choose a programming language suitable for financial data analysis.
-
Enroll in an online course or tutorial to learn the basics of the language.
-
Complete coding exercises and projects to apply your knowledge.
-
Build a portfolio of financial data analysis projects.
Develop a Personal Financial Decision-Making Plan
Show steps
Create a personalized plan that outlines your financial goals, strategies, and actions for improving your decision-making.
Show steps
-
Identify your financial goals and objectives.
-
Research different financial strategies and investment options.
-
Outline a step-by-step plan for implementing your strategies.
-
Create a budget and track your expenses.
-
Regularly review and adjust your plan as needed.
Attend Industry Conferences and Webinars
Show steps
Network with professionals in the field of behavioral finance, learn about current trends, and gain insights from experts.
Show steps
-
Identify industry conferences and webinars related to behavioral finance.
-
Register and attend the events.
-
Engage with speakers and attendees, ask questions, and exchange ideas.
-
Follow up with individuals you connect with and explore potential collaborations.
Online Probability and Statistics Review
Show steps
Take an online tutorial on probability and statistics to strengthen your foundation in these areas.
Browse courses on
Probability
Show steps
Show steps
Show steps
- Identify a reputable online tutorial on probability and statistics.
- Create a schedule for completing the tutorial.
- Complete the tutorial, taking notes and working through any practice problems.
- Review the material regularly to retain the information.
Read 'Thinking, Fast and Slow' by Daniel Kahneman
Show steps
Read the seminal work in behavioral finance that will provide a comprehensive overview of the concepts we will explore in this course.
View
Noise: A Flaw in Human Judgment
on Amazon
Show steps
Show steps
Show steps
- Purchase or borrow the book.
- Create a reading schedule.
- Read the book, taking notes and highlighting important passages.
- Summarize the key concepts in your own words.
Review Heuristics and Biases
Show steps
Review the concepts of heuristics and, using the resources provided in Week 1, review examples to build intuition.
Browse courses on
Heuristics
Show steps
Show steps
Show steps
- Read the course syllabus, especially Week 1 materials.
- Review the resources provided in Week 1 on heuristics and biases.
- Create flashcards to memorize key concepts and examples.
Five other activities
Expand to see all activities and additional details
Show all eight activities
Join a Study Group or Online Forum
Show steps
Connect with peers to discuss the course material, share insights, and support each other's learning.
Show steps
Show steps
Show steps
- Identify potential study groups or online forums related to behavioral finance.
- Join a group that aligns with your learning goals and schedule.
- Actively participate in discussions, ask questions, and share your own perspectives.
- Take advantage of opportunities to collaborate on projects or assignments.
Practice Applying Heuristics and Biases to Financial Scenarios
Show steps
Complete practice exercises and simulations to sharpen your ability to recognize and mitigate financial biases.
Show steps
Show steps
Show steps
- Identify online resources or textbooks with practice problems.
- Set aside time for regular practice sessions.
- Work through the practice problems, analyzing the scenarios and identifying the relevant biases.
- Review your answers and seek feedback from peers or instructors.
- Repeat the practice until you feel confident in your ability to apply the concepts.
Learn a Programming Language for Financial Data Analysis
Show steps
Develop proficiency in a programming language to analyze financial data and gain insights not readily available through manual methods.
Browse courses on
Python
Show steps
Show steps
Show steps
- Choose a programming language suitable for financial data analysis.
- Enroll in an online course or tutorial to learn the basics of the language.
- Complete coding exercises and projects to apply your knowledge.
- Build a portfolio of financial data analysis projects.
Develop a Personal Financial Decision-Making Plan
Show steps
Create a personalized plan that outlines your financial goals, strategies, and actions for improving your decision-making.
Show steps
Show steps
Show steps
- Identify your financial goals and objectives.
- Research different financial strategies and investment options.
- Outline a step-by-step plan for implementing your strategies.
- Create a budget and track your expenses.
- Regularly review and adjust your plan as needed.
Attend Industry Conferences and Webinars
Show steps
Network with professionals in the field of behavioral finance, learn about current trends, and gain insights from experts.
Show steps
Show steps
Show steps
- Identify industry conferences and webinars related to behavioral finance.
- Register and attend the events.
- Engage with speakers and attendees, ask questions, and exchange ideas.
- Follow up with individuals you connect with and explore potential collaborations.
Career center
Learners who complete Behavioral Finance will develop knowledge and skills
that may be useful to these careers:
Behavioral Economist
Behavioral Economist
As a Behavioral Economist, you would study the psychological and emotional factors that influence economic decision-making. This course would provide you with a solid foundation in the principles of behavioral finance, which are essential for understanding how individuals and markets behave in real-world situations.
Financial Advisor
Financial Advisor
As a Financial Advisor, you would provide financial advice and guidance to clients, which may include topics such as investment planning, retirement planning, and wealth management. This course on Behavioral Finance would be particularly helpful in this role, as it would provide you with a deeper understanding of the psychological factors that influence financial decision-making. This knowledge would help you better understand and meet the needs of your clients.
Investment Analyst
Investment Analyst
As an Investment Analyst, your role would be to analyze and interpret financial data to make investment recommendations. Taking this course would give you an edge in understanding the behavioral biases that can affect investment decisions. By being aware of these biases, you could make more informed and rational investment decisions, leading to better outcomes for your clients.
Risk Manager
Risk Manager
As a Risk Manager, you would be responsible for identifying, assessing, and managing financial risks within an organization. A key aspect of this role is understanding how psychological factors influence risk-taking behavior. This course would equip you with the knowledge and tools to effectively manage these risks, making you a valuable asset to any organization.
Insurance Underwriter
Insurance Underwriter
As an Insurance Underwriter, you would be responsible for assessing and pricing insurance risks. This course would be particularly relevant to your role, as it would provide you with a deeper understanding of how psychological factors influence risk perception and decision-making among insurance applicants.
Quantitative Analyst
Quantitative Analyst
As a Quantitative Analyst, your job would be to develop and apply mathematical and statistical models to analyze financial data. This course would supplement your technical skills by providing you with a deeper understanding of the behavioral biases that can affect financial markets, enabling you to build more accurate and reliable models.
Financial Planner
Financial Planner
As a Financial Planner, you would help clients plan and manage their finances. This course on Behavioral Finance would be highly beneficial to you, as it would provide you with a deeper understanding of the psychological factors that influence financial decision-making. This knowledge would help you better understand the needs and motivations of clients, and develop more effective financial planning strategies.
Sales Manager
Sales Manager
As a Sales Manager, you would lead and motivate a team of sales professionals to achieve sales targets. This course on Behavioral Finance would be highly beneficial to you, as it would provide you with a deeper understanding of the psychological factors that influence consumer decision-making. This knowledge would help you better understand the needs and motivations of customers, and develop more effective sales strategies.
Marketing Manager
Marketing Manager
As a Marketing Manager, you would develop and execute marketing campaigns to promote products or services. This course could enhance your effectiveness in this role by providing you with insights into consumer behavior and the psychological factors that influence purchasing decisions.
Actuary
Actuary
As an Actuary, you would use mathematical and statistical methods to assess risk in the insurance and financial industries. This course on Behavioral Finance may be useful to you, as it would provide you with a deeper understanding of the psychological factors that influence risk perception and decision-making. This knowledge could be valuable in your work, as you may be involved in pricing insurance policies or developing risk management strategies.
Economist
Economist
As an Economist, you would study the production, distribution, and consumption of goods and services. This course on Behavioral Finance may be useful to you, as it would provide you with a deeper understanding of the psychological factors that influence economic decision-making. This knowledge could be valuable in your work, as you may be involved in research or policy analysis that affects financial markets or consumer behavior.
Psychologist
Psychologist
As a Psychologist, you would study human behavior and mental processes. This course on Behavioral Finance may be useful to you, as it would provide you with a deeper understanding of the psychological factors that influence financial decision-making. This knowledge could be valuable in your work, as you may encounter clients who are struggling with financial decision-making or financial planning.
Consultant
Consultant
As a Consultant, you would provide advice and guidance to businesses and organizations. This course on Behavioral Finance may be useful to you, as it would provide you with a deeper understanding of the psychological factors that influence organizational decision-making. This knowledge could be valuable in your work, as you may be involved in projects that require an understanding of consumer behavior or financial decision-making.
Data Scientist
Data Scientist
As a Data Scientist, you would use data to solve business problems. This course on Behavioral Finance may be useful to you, as it would provide you with a deeper understanding of the psychological factors that influence human behavior. This knowledge could be valuable in your work, as you may be involved in projects that require an understanding of consumer behavior or financial decision-making.
Teacher
Teacher
As a Teacher, you would educate students in a specific subject area. This course on Behavioral Finance may be useful to you, as it would provide you with a deeper understanding of the psychological factors that influence learning and decision-making. This knowledge could be valuable in your work, as you may be involved in developing teaching methods or curriculum that takes into account the behavioral biases of students.
For more career information including salaries, visit:
OpenCourser.com/course/ozw6zx/behavioral
Reading list
We've selected 37 books
that we think will supplement your
learning. Use these to
develop background knowledge, enrich your coursework, and gain a
deeper understanding of the topics covered in
Behavioral Finance.
Save
Classic in the field of behavioral economics and provides a comprehensive overview of the cognitive biases that can lead to financial decision-making errors. It is written in a clear and engaging style and is highly recommended for anyone interested in learning more about this topic.
Save
Is another excellent resource for learning about behavioral economics. It provides a wealth of examples of how cognitive biases can affect our financial decisions and offers practical advice on how to avoid these biases.
Classic in the field of behavioral finance and is useful as a reference tool. It is also commonly used as a textbook at academic institutions.
Is about the irrational ways that we make decisions. Ariely argues that we are often influenced by our emotions, our social biases, and our cognitive limitations.
Save
Is about how we can use nudges to improve our decisions. Nudges are small changes to the environment that can make it easier for us to make good choices.
Save
Adds depth to the subject matter of this course and is suitable for additional reading or research purposes.
Save
Valuable resource for this course and is most useful as a reference tool. It may also be used for additional reading.
Discusses the concept of nudges, which are small changes to the environment that can encourage people to make better decisions. It provides a number of examples of how nudges can be used to improve financial decision-making.
Save
Provides background and historical context for the subject matter of this course and is good for additional reading or research.
Provides a unique perspective on behavioral finance by focusing on the psychological factors that influence our financial decisions. It is written in a clear and engaging style and great choice for anyone who wants to learn more about this topic.
Save
Presents a more in-depth look at the subject matter of this course and is suitable for additional reading or research purposes.
Save
Provides current and practical applications of the subject matter covered in this course and is useful as a reference tool.
Practical guide to behavioral finance that is written for financial professionals. It provides a comprehensive overview of the field and offers practical advice on how to use behavioral insights to make better investment decisions.
Save
Is an investment book that draws on behavioral economics. It offers a number of strategies for making better investment decisions.
Classic guide to investing. Graham argues that investors should focus on the long-term and should avoid making emotional decisions.
Provides additional depth to the subject matter covered in this course and good text to read alongside the course as a reference.
Save
Provides a fresh perspective on the subject matter of this course and is good for additional reading.
Classic guide to security analysis. Graham and Dodd argue that investors should focus on the fundamental value of a company when making investment decisions.
Save
Provides additional depth to the subject matter of this course and is good for additional reading or research.
Save
Collection of essays on behavioral economics. It offers a number of insights into how our irrationality affects our economic decisions.
Guide to investing for the long-term. Bogle argues that investors should focus on index funds and should avoid making emotional decisions.
Save
Popular science book that explores the science of habits. It offers a number of insights into how we can change our habits.
Philosophical exploration of the paradox of choice. It offers a number of insights into how the abundance of choices can lead to unhappiness.
Collection of essays by Warren Buffett. Buffett is one of the most successful investors in history, and his essays provide valuable insights into his investment philosophy.
Save
Popular science book that explores the science of persuasion. It offers a number of insights into how we can be persuaded to do things that we do not want to do.
Provides a detailed look at the habits and characteristics of millionaires. It valuable resource for learning how to build wealth.
Save
Popular science book that explores the science of the brain. It offers a number of insights into how our brains work, and how they affect our behavior.
Guide to behavioral economic theory and its broad implications for society.
Offers practical advice for young adults on how to manage their money. It great resource for learning how to budget, save, and invest.
Guide to behavioral economics and finance.
Provides a step-by-step plan for getting out of debt and building wealth. It great resource for learning how to take control of your finances.
Guide to game theory and its applications to behavioral economics and finance.
Guide to game theory and its applications to behavioral economics and finance.
Save
Explores the psychological factors that influence financial planning. It valuable resource for learning how to make sound financial decisions.
This handbook provides a comprehensive overview of the field of behavioral finance. It valuable resource for learning about the latest research on the psychological factors that influence financial decision-making.
Provides a practical guide to behavioral finance. It valuable resource for learning how to apply behavioral insights to investment decisions.
Save
This workbook provides exercises and activities to help you understand and overcome your financial biases. It great resource for learning how to make more informed financial decisions.
For more information about how these books relate to this course, visit:
OpenCourser.com/course/ozw6zx/behavioral
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Effort
3 weeks of study, 2-3 hours/week
Level
Introductory
Via
Coursera
Institution
Duke University
Instructors
Emma Rasiel
John Forlines III
Language
English
Transcripts
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Good to know
Demystifies heuristics and cognitive biases that impede financial decision-making
Leads learners towards smarter financial decision-making
Optimizing spending, saving, and investing decisions for the future
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