Behavioural and Experimental Finance
Cursus informatieRooster
Studiepunten (ECTS)6
Aangeboden doorRadboud Universiteit; Faculteit der Managementwetenschappen; Bachelor Economie en Bedrijfseconomie;
dr. S.C. Füllbrunn
Overige cursussen docent
dr. S.C. Füllbrunn
Overige cursussen docent
Contactpersoon van de cursus
dr. S.C. Füllbrunn
Overige cursussen docent
dr. S.C. Füllbrunn
Overige cursussen docent
dr. S. Nolte
Overige cursussen docent
3  (30-01-2023 t/m 09-04-2023)
Inschrijven via OSIRISJa
Inschrijven voor bijvakkersJa
At the end of this course, you are able to…

  • identify and distinguish the concepts of behavioural finance research
  • discriminate between traditional finance concepts and behavioural finance concepts
  • identify the behavioural bias and psychological characteristics of investors
  • evaluate financial prospects by applying expected utility theory and prospect theory
  • identify and understand selected analysis tools of empirical behavioural finance
  • understand experimental methods in finance
  • apply selected analysis tools of empirical behavioural finance
  • apply experimental finance methodology
  • identify behavioural bias mitigation techniques
  • summarise essential elements of an empirical/experimental project in a research report
Until the 90s, the rational agent framework determined finance research, mainly promoted by the Chicago School. Stock prices are neither too high nor too low as unlimited arbitrage allows competing arbitrageurs to bring prices back to fundamental value, even if irrational traders want to trade beyond fundamental value. As “one man’s gain is another man’s loss”, the arbitrageurs exploit the rents generated by irrational traders and thus “kick” them out of the market—the conclusion: Prices are efficient, i.e., they reflect all available information (Efficient Market Hypothesis). In the 90s, the behavioural agent framework blossomed as researchers showed that arbitrage is limited, saying that smart traders cannot always exploit mispricing. Consequently, irrational traders might survive while prices stay off the fundamental value suggesting markets are not to be (always) efficient.

Behavioural Finance uses cognitive and social psychological insights to explain price behaviour in financial markets (market level) and financial decision-making (individual level). This field has gained even more attention with the Nobel laureate in 2017, Richard Thaler, one of the pioneers in behavioural finance. Indeed, behavioural finance should not exist anymore. In the words of Thaler (1999): “I predict that in the not-too-distant future, the term “behavioural finance” will be correctly viewed as a redundant phrase. What other kind of finance is there? In their enlightenment, economists will routinely incorporate as much “behaviour” into their models as they observe in the real world. After all, to do otherwise would be irrational.” Still, BF is kind of a separate field in finance.

This course provides insights into the key concepts of behavioural finance. Building upon the rational agent framework, you will learn about behavioural biases and heuristics and their impact on financial decision making and financial market outcomes. We challenge the rational agent framework by discussing empirical and experimental evidence, showing that behavioural biases can result in market anomalies and puzzles (deviations from the rational model). We discuss methods to detect and understand BF issues using Experimental Finance (EF) and Empirical Behavioural Finance (EBF).
We presume knowledge of ‘finance 101’ elements derived from courses like corporate finance or investment management. We might recall some of those elements but expect to be familiar with the underlying concepts. Your mathematical skills should be in line with 3rd-year ECON bachelor student skills. Expect analytical and numerical examples, including optimisation problems and probability calculations. Make yourself comfortable with the natural logarithm and the related e-function. We also deal with data analysis methods, so we expect fundamental knowledge in statistics and econometrics. For example, you will perform hypothesis testing tests and might use OLS regressions using Excel, STATA or other software packages (your choice).
Written exam and essays from a group project. Partial grades do not remain valid next year.
You will have to participate in experiments and online surveys also during the lectures. Hence, you should bring a notebook/tablet/smartphone.

Detailed topics will be announced on Brightspace shortly before the course starts.
Ba 3 PM RE

Aanbevolen materiaal
Lucy F. Ackert/Richard Deaves 2009. Behavioral Finance. South-Western Cengage Learning. ISBN 9780324661170
More information will be provided during the course.


Final Grade
ToetsvormDigitale toets met SOWISO
GelegenhedenBlok 3, Blok 4

Several components add to the grade. The course manual provides detailed information right before the course starts.