Behavioral Finance

1
Behavioral Finance
2
Traditional Finance

• All market participants are rational,
  value-maximizing individuals.
• All market participants are capable of correctly
  applying probability and decision making under
  uncertainty.

3
Behavioral Finance

• Individuals are sometimes irrational and make
  decisions based on emotion rather than sound
  decision making.
• Individuals do not process probability well and
  are poor at decision making under uncertainty.
• Individuals often rely on heuristics or rules
  of thumb for decision making.
• Individuals can be tricked by the form that
  information takes. This is referred to as
  framing.

4
Contests and Quiz

• Games
• Quiz
• Coin Flipping