School: Duke University
Registration Link: REGISTER HERE
Start Date: August 1, 2016 (3 Weeks)
Workload: Not specified
Instructor: Emma Rasiel
Credentials: Rasiel teaches courses in Intermediate Finance and Behavioral Finance at Duke University, where she also serves as the teaching director of the Duke Financial Education Center. Holding a Ph.D. in finance from Duke and an MBA from the Wharton School, Rasiel was the executive director at Goldman Sachs’s London office.
Graded: Students must successfully complete all graded assignments to pass the course.
Description: You’ve probably read the business pages and thought to yourself, “I’d never do that. That’s too risky. Don’t they know the rules apply to them too?” Well, that’s easier said than done. Many times, particularly in the financial world, investors don’t always act rationally. They act against their long-term interests by following the herd; correlating two disparate events or trends; accepting only data that conforms to their beliefs; or believing they are exceptions who are smarter than everyone else.
Like all behavior, investing sometimes involves irrational fear and exuberance, if not outright hubris. According to Rasiel, 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 class, students will learn about the heuristics (the shortcuts and “rules of thumb” that we use to invest) that often lead to tragic financial decisions. These examples, from Rasiel’s experience, may include everything from holding onto poorly performing investments to skimping on insurance.
Over this three -week course, students will review “rational” economic theories before moving into scenarios where investors “are most inclined to make decisions that appear to defy rational choice axioms.” From there, the course will move into why investors are more “inclined to distort probabilities, and either underestimate or overestimate the likelihood of certain outcomes.” At the same time, Rasiel will cover common types of bias and strategies for enhancing financial decision-making.
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