About this course: 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.
Who is this class for: This course is intended for anyone who has taken at least one course in economics either in high school or in college, and is interested in how our innate biases affect our financial decision-making.
Taught by: Emma Rasiel, Associate Chair and Professor
Economics
| Language | English, Subtitles: Portuguese (Brazilian) |
| How To Pass | Pass all graded assignments to complete the course. |
| User Ratings |
- Reading: Course Overview
- Video: Introduction to Classical Economics
- Reading: Utility of Money
- Video: Utility of Money
- Reading: Omission Bias
- Video: Omission Bias Case Study
- Video: Expected Utility vs Prospect Theory
- Reading: Answer Choice Explanations and Correct Answers for Week 1 Quiz
- Reading: Problems with Probability
- Reading: Probability Weighting
- Video: Probability Weighting
- Video: Relative Probabilities
- Reading: The Availability Heuristic
- Video: The Availability Heuristic
- Reading: Framing
- Video: Mental Accounting and Expenditures
- Video: Loss Aversion
- Reading: Representativeness
- Reading: Overconfidence
- Video: Belief Perseverance and Confirmation Bias
- Video: Case Study: Belief Perseverance
- Reading: Money Management
- Video: Benefits of Saving Early
- Reading: Market Bubbles & Crashes
Each course is like an interactive textbook, featuring pre-recorded videos, quizzes and projects.
Connect with thousands of other learners and debate ideas, discuss course material, and get help mastering concepts.
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Perhaps add some investment strategies to the class? Ones that can be used to make money by understanding the market's behavioral biases, rather than simply avoiding mistakes in personal investing by knowing one's own behavioral biases.
E
This course was a very good sum up of Daniel Kahneman's thinking fast and slow. Definitely recommend to everyone who would like to know more about our flaws or would like to refresh your knowledge.
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It was a good introductory course on behavioral finance. One will get to know about many hidden biases, which play a crucial role in their decision making.