25893 Behavioural Finance: Prospect Theory3cp
Requisite(s): 25742 Financial Management OR 25799 Financial Management
These requisites may not apply to students in certain courses.
There are course requisites for this subject. See access conditions.
Anti-requisite(s): 25770 Behavioural Finance
This subject outlines the main theory used to explain market anomalies, namely Prospect Theory. It then applies the theory to explain several financial market puzzles and investor mistakes. The subject covers present-biased preferences and reviews the most important heuristics and biases among investors, asset managers and financial advisors. Finally, it synthesises the key ideas from classical finance and behavioural finance.
Detailed subject description.