A tour of behavioral finance

The behavioral finance revolution has improved our understanding of how markets work by considering the psychology of investors, managers, and advisors. In this approach, investors have biased beliefs that result in systematic and predictable trading errors. Markets are not perfectly efficient, and security prices are determined by both risk and mispricing. Psychological bias affects the financing and investment decisions of firms because of managerial errors, and because of firms’ responses to inefficient prices. This overview focuses on the effects of feelings, limited attention, and overconfidence, and touches upon the nascent field of social finance. 

In-person seminar with lunch (Please reserve a lunch box by emailing: AOpsRSVP@law.usc.edu)