PSICOM01 - BEHAVIORAL ECONOMICS AND FINANCE

courses

ID:

PSICOM01

Duration (hours):

48

CFU:

SSD:

ECONOMIA AZIENDALE

Located in:

CHIETI

Url:

Course Details:

PSYCHOLOGY/NEUROSCIENZE COGNITIVE Year: 1

Year:

2025

Course Catalogue:

https://unich.coursecatalogue.cineca.it/af/2025?co...

Date/time interval

Primo Semestre (29/09/2025 - 20/12/2025)

Course Objectives

Expected Learning Outcomes:

D1) Knowledge and Understanding:
By the end of the course, students should:
- Have knowledge of the main behavioral theories, including Prospect Theory, the two-system model of thinking, and the concept of bounded rationality
- Understand cognitive biases and heuristics that influence judgments and choices under uncertainty
- Become familiar with key behavioral economics concepts such as loss aversion, reference point effects, etc.
- Comprehend the "ecological rationality" approach

D2) Ability to Apply Knowledge and Understanding:
Students should be able to:
- Apply behavioral models to analyze and predict economic and financial decisions of individuals
- Critically evaluate the limitations of traditional economic models assuming unlimited rationality
- Appropriately use decision heuristics depending on the environmental context
- Analyze how psychological and behavioral factors impact financial markets
- Propose nudging strategies and policies to guide individual and organizational behaviors

Teaching Methods

Lectures, discussion of scientific articles, and participation in laboratory activities for experiments in economics and behavioral finance.
The students' preparation will be verified through an interview. The final grade will be expressed in thirtieths. The subjects to be examined will reflect those covered during the course and present in the program.

Assessment Methods

The students' preparation will be assessed through an interview. The final grade will be expressed in thirtieths. The subjects examined will reflect those covered during the course and listed in the program.

Texts

Recommended readings:
• D. Kahneman, Thinking Fast and Slow, Farrar, Straus and Giroux, 2011.
• R. Thaler, Misbehaving: The Making of Behavioral Economics, 2015.
• R. J. Shiller, Irrational Exuberance, Crown Pub, 2006.
• G. Gigerenzer, Risk Savvy: How To Make Good Decisions, Allen Lane, 2014.

This course will examine the major theoretical and empirical contributions of behavioral economics and finance, challenging the assumption of unlimited rationality that traditional economic models ascribe to economic agents. It will analyze how people actually make decisions under conditions of risk, uncertainty, and limited cognitive resources.

Key topics will include Kahneman and Tversky's Prospect Theory, which describes decision-making in risky situations, where people exhibit loss aversion and reference point dependence. The course will then examine cognitive heuristics and biases that influence judgments and choices under uncertainty, such as representativeness, anchoring, availability heuristic, and others described by Kahneman in "Thinking, Fast and Slow."

The concept of bounded rationality by Herbert Simon and the two-system model of thinking (System 1 and System 2) will be introduced to understand how intuitive and reflective reasoning interact during decision-making processes.

Following Gigerenzer's "ecological rationality" approach, the course will show how using simple heuristics can often lead to better decisions than cost-benefit analysis in uncertain and complex environments.

Finally, it will analyze the effects of psychological and behavioral factors on financial markets, as well as the implications of behavioral finance, as described in Thaler's text, for investors, businesses, and public policies.