Minor Deepening Minor: Behavioural Finance

Verdiepende minor


The minor in behavioral finance combines finance with the psychology behind human decision making. The course is organized around three main parts: first we introduce rational decision making as viewed by traditional economics and finance models, to further develop on behavioral models that explain deviations from optimal decision making. We discuss several biases that behavioral economics has identified to be systematic and we study the real-life effects of psychological biases in two specific situations: Investment Behavior and Behavioral Corporate Finance, which are the second and third part of the course.


In the second part of the course, we focus on investor behavior and how do behavioral biases affect their decision making, and how these decisions in turn affect market efficiency. We explore the most recent research and literature that uses behavioral models to explain investor behavior and markets anomalies.


In the third part of the course we approach the behavioral corporate finance issues where the aim is to understand the financial decisions of companies and their managers in two different situations: the first approach assumes that investors are less than fully rational, but managers remain rational. We will study the implications of the irrational investors in the decision making of a manager. Another approach assumes that managerial behavior is less than fully rational in an efficient market environment. Under these conditions we study how biased managers might make suboptimal investment or financing decisions for their companies

The topics in this course are supported by guest lectures from leading practitioners and academics.

Learning objectives

  • Students will gain knowledge of and insight into the behavioural finance literature.
  • Students will gain understanding of the traditional vs behavioral views of finance and economics regarding decision making.
  • Students will gain knowledge of and insight into the effects of psychological biases on economic and financial decision making.
  • Students will be able to distinguish behavioural approaches to finance from traditional ones.
  • Students will be able to write a research proposal including literature review, methods and testing hypotheses on a behavioral finance topic.
  • Students will able to recognize behavioural biases in decision making, for both their own decisions and others.

Special aspects

On average, students have 8 lecture hours per week, typically in the afternoon including the guest lectures. Successful participation in this minor requires a significant ability to deal with abstract concepts.

Overview modules

Module 1: Decision making and biases

  • Content: Traditional theories in the field of finance are mostly based on the notion that investors and managers are rational. Research over the past decades, however, has shown that their actual behaviour systematically deviates from rational norms. This module on Financial Decision Making and Biases provides an introduction to the bounded rationality of individuals when they make financial decisions. We will discuss the Nobel-prize winning Prospect Theory that describes how people make choices that involve risks, and examine the most prominent evidence from psychology on biases that arise in individual decision making, such as when assessing the likelihood of events.
  • Teaching method: Plenary lectures.
  • Teaching materials: We will provide a reader with selected articles for all modules. In addition, students are to download material themselves.
  • Contact hours: 8 per week
  • Self study: 32 per week

Module 2: Behavioral investments

  • Content:The module on Behavioral Investments applies the concepts from the first module to the area of investments. The module consists of two parts. In the first part, we discuss the so-called market anomalies. The examples where the market is not fully efficient can provide a direct investment opportunity. The second part discusses the typical biases in buy- and sell-decisions by individuals. We look at expectations of investors and their subsequent decisions. Recognizing biases in your own behavior can lead to better investment decisions in the future.
  • Teaching method: Plenary lectures.
  • Teaching materials: We will provide an overview of the relevant articles; these can all be downloaded from the library.
  • Contact hours: 8 per week
  • Self Study: 32 per week

Module 3: Behavioral corporate finance

  • Content:The module on Behavioral Corporate Finance starts out with the basic concept of value creation: what is it, how can it be measured, and why is it important? From this framework, the module turns to the question of how management can try to improve (create) company value, and which behavioral (and other) factors prevent managers from achieving the firm’s full valuation potential. This process will be illustrated by numerous real-life examples.
  • Teaching method: Plenary lectures.
  • Teaching materials: We will provide an overview of the relevant articles; these can all be downloaded from the library.
  • Contact hours:  8 per week
  • Self study: 32 per week

Overview content per week

Week 1-2: Decision Making and Biases
Week 3: Team Assignments
Week 4-5: Behavioral Investments
Week 6-7: Behavioral Corporate Finance
Week 8: Exam


Method of examination
There is a mandatory team assignment at the end of the first module, and a final exam at the end of the minor. The team assignments provide a 20% part of the grading. The remaining 80% part is the written (re-)exam with multiple-choice answers.

Composition final grade 
The final grade for the minor is sum of the grade for the team assignment (20%) and  the grade for the (re-) exam (80%). There is an option to resit the exam in the summer period.

Students are given the possibility to review their exam after getting their grades.

Contact information

Adriana Breaban
+31 651448213
room: E2-43

Faculty website

Verdiepende minor
Erasmus School of Economics
Studiepunten (ECTS)
Campus Woudestein, Rotterdam


Please read the application procedure for more information.