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Poslední úprava: doc. PhDr. Julie Chytilová, Ph.D. (25.08.2022)
In the first part of the course (six lectures), Michal Bauer and Julie Chytilová will focus on the following topics: social preferences and fairness, time discounting and limited self-control, discrimination and group identity and inattention. In the second part of the course (four lectures), Jiří Kukačka wil focus on behavioral finance, specifically on investors' psychology and its aggregate effects on financial markets, and agent-based computational finance. After introducing the concepts, the classes will be largely based on discussion of individual papers. |
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Poslední úprava: SCHNELLEROVA (20.11.2019)
A grade from this course will be based on a written final test, which will take place at the end of the course. Grading: A = 90.1-100; B = 80.1-90; C = 70.1-80; D = 60.1-70; E = 50.1-60; F = 0-50. |
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Poslední úprava: doc. PhDr. Julie Chytilová, Ph.D. (25.08.2022)
Please see the list of the readings in the syllabus |
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Poslední úprava: doc. PhDr. Julie Chytilová, Ph.D. (25.08.2022)
A grade from this course will be based on a written final test, which will take place at the end of the course. Grading: A = 90.1-100; B = 80.1-90; C = 70.1-80; D = 60.1-70; E = 50.1-60; F = 0-50.
There will be four dates for the final exam which will take place in room 314. • December 21, 2022, 8:00-9:20am • January 13, 2023, 9:30-10:50am • January 20, 2023, 9:30-10:50am • February 3, 2023, 9:30-10:50am |
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Poslední úprava: doc. PhDr. Julie Chytilová, Ph.D. (25.08.2022)
For the list of readings for each topic please see the attached pdf document with the syllabus
TOPIC 1: INTRODUCTION (Michal Bauer) Main questions • What is the definition of behavioral economics? • How does behavioral economics differ from experimental economics? • Overview of topics and requirements of this course
TOPIC 2: Social preferences (Michal Bauer) Main questions • Models of social preferences: altruism, inequality aversion, reciprocity, concern about social efficiency • Evidence of trust and reciprocity in the laboratory • Applications • How can social preferences help to explain unemployment? • Reciprocity on the labor market: Can employers motivate employees to exert more effort by giving them higher wages? Do wage cuts reduce effort? • Reciprocity in charitable giving: Can NGOs mobilize donations by distributing gifts? • Reciprocity in day care centers: Can introducing “market” crowd out fairness motives? • Formation of social preferences
TOPIC 3: Time discounting and limited self-control (Michal Bauer) Main questions • Present-biased preferences and naivite: introducing the concepts • Are people present-biased? • Demand for commitment • Do people procrastinate? Can deadlines help? • Do people demand commitment when they want to save or stop smoking? • Psychology of poverty • Does poverty increases impatience? • Does poverty impair cognitive function and increases stress? • How does stress and lower cognitive function affect decision-making?
TOPIC 4: Decision-making in groups and group identity (Julie Chytilová) Main questions • Are there differences in decision-making of individuals and of groups? Are groups more rational and selfish? • What is the role of group deliberation vs. the effect of being a member of a group? • How can group identity influence economic outcomes? • How can we measure the effects of group identity/membership on behavior? • Priming: making identity salient by asking questions • Minimal group experiments: dividing subjects to artificial groups • Experiments with real life groups
Topic 5: Discrimination (Julie Chytilová) Main questions • How can we rigorously measure existence of discrimination against people with a certain group attribute (ethnicity, gender, etc.)? • What are the standard economic explanations of discrimination? • Preference based discrimination and statistical discrimination • Can they explain the existing patterns from experiments on discrimination? • Why can costly attention magnify discrimination? What can be done about that? • Are stereotypes about other groups accurate? Can discrimination arise due to inaccurate stereotypes? • Sub-conscious sources of discrimination • Implicit Association Test and Implicit discrimination • Stereotype threat: Can salience of stereotype trigger behavior that confirms the stereotype?
TOPIC 6: INTRODUCTION TO BEHAVIORAL FINANCE (Jiří Kukačka) Main questions • History and the current state of the art of behavioral finance research • What are some unrealistic assumptions of traditional financial models? • Efficient Market Hypothesis, Rational Expectation Hypothesis, representative agent • the CAPM model, the Four Factor model, the NPV model • The role of bounded rationality in economic theory • What are the limits to professional arbitrage? • What are the main distinctions between the “traditional” finance paradigm and the “behavioral” finance approach?
TOPIC 7: INVESTORS’ PSYCHOLOGY I: HEURISTICS AND COGNITIVE BIASES (Jiří Kukačka) Main questions • What is the role of human beliefs and cognitive biases in financial markets? • overconfidence, optimism, survivorship bias, endowment effect, loss aversion • What are the typical heuristics people tend to follow? How can these influence financial decisions of investors? • availability, representativeness, 1/N, framing, anchoring • Can we indirectly influence the behavior and decision making of individuals or groups? Can we improve people's decisions about safety, health, or happiness? How can we induce people to save enough?
TOPIC 8: INVESTORS’ PSYCHOLOGY II: PROSPECT THEORY AND MENTAL ACCOUNTING, SOCIAL INFLUENCES IN FINANCIAL MARKETS (Jiří Kukačka) Main questions • What are alternative approaches to preference formation? • Prospect Theory (vs. EU Theory), mental accounting, ambiguity aversion • What are the most important social influences on financial markets? • “beauty contest”, herding, market sentiment, asset market bubbles and crashes
TOPIC 9: STOCK MARKET ANOMALIES, AGENT-BASED COMPUTATIONAL FINANCE (Jiří Kukačka) Main questions • What are the most known stock market anomalies and can we explain them? Can we profit from their knowledge? • equity premium puzzle, volatility puzzle, calendar effects, momentum trading • How can we model the elementary trading strategies represented in financial markets? • fundamentalists and chartists • Can prices evolve endogenously based only on interactions of market participants? • Heterogeneous Expectations Hypothesis • Are there alternative financial models? Catastrophe model, heterogeneous agents modeling
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Poslední úprava: doc. PhDr. Julie Chytilová, Ph.D. (04.11.2019)
Pre-requisite JEB104 – Microeconomics I |