This course introduces students to the behavioral finance view of asset pricing. The first part of the course provides a historical perspective on the development of securities markets. The second part discusses the foundations of the efficient market hypothesis, which forms the basis for the traditional 'rational' view of asset pricing. The third and fourth parts focus on the theoretical and empirical challenges facing the efficient market hypothesis and consider alternative 'behavioral' interpretations of securities pricing. Specific topics covered include noise trading, investor sentiment, limits to arbitrage, overreaction and underreaction to news, excess volatility, return predictability, market booms and busts, and institutional trends in market development.
Prerequisites: Grundlagen der Finanzwirtschaft I + II
Preliminary Literature:
Shiller, R. J.: "Irrational Exuberance", Princeton University Press, 3rd Edition (2015)
Shleifer, A.: "Inefficient Markets: An Introduction to Behavioral Finance", Oxford University Press (2000)
Barberis, N. and Thaler, R. H.: "A Survey of Behavioral Finance", Handbook of the Economics of Finance, Amsterdam: North-Holland (ed. G. Constantinides, M. Harris, and R. Stulz, 2003)
- Kursverantwortliche/r: Maria Kasch