Behavioral Finance - The Role of Psychology in Financial Decision-Making

Yale University via YouTube

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Details

Start learning

Provider

YouTube
Pricing

Free Video
Languages

English
Duration & workload

1 hour 5 minutes
Sessions

On-Demand
Level

Intermediate

Found in

Explore the fascinating world of Behavioral Finance in this Yale University lecture. Delve into the revolutionary field that applies insights from social sciences to finance, challenging traditional economic theories. Discover how psychological patterns like overconfidence impact financial decision-making and learn about Kahneman and Tversky's Prospect Theory, which addresses irrational deviations from classical models. Examine market volatility through a present value analysis, understand the ubiquity of overconfidence in financial markets, and investigate how people make choices according to Prospect Theory. Finally, explore the Regret Theory and how fashion can be used as a measure of market behavior. This comprehensive lecture provides a solid foundation in Behavioral Finance, offering valuable insights for anyone interested in the intersection of psychology and economics in financial decision-making.

Syllabus

- Chapter 1. What Is Behavioral Finance?
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- Chapter 2. Market Volatility: Random, or Socially Influenced? A Present Value Analysis
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- Chapter 3. Overconfidence: Its Ubiquity and Impact on Financial Markets
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- Chapter 4. The Kahneman and Tversky Prospect Theory or, How People Make Choices
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- Chapter 5. The Regret Theory and Fashion as a Measure of the Market
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Taught by

YaleCourses

Reviews

4.8 rating, based on 17 Class Central reviews

Start your review of Behavioral Finance - The Role of Psychology in Financial Decision-Making

Elisey Tsyrkunov @EliseyTheEconomist

This course helps to understand what Behavioral Finance is about. You will be provided with real life-examples of the influence of human's behaviour on choices in the field of finance and how the distorted perception of risks can lead to potential material losses. Furthermore, these examples showcase that behavioral fiance adds another dimension to mathematical analyses of the markets and that its influence can not be neglected. This course would be an excellent starting point for anyone who is wishing to learn the intricacies of human decision processes in finance
Lethukuphila Hendrick Shezi
2

Helpful,

I recommend it to everyone who wishes to gain more knowledge in the field. Get to understand what role does psychology play in the Financial Decision-making. It also delved into how cognitive biases, emotions, and social factors influence financial choices.
Ahmad Gibran Arsyamullah

I certainly want to give a big applause to this course. Not only does it give me a new perspective on the integration between psychology and economics, but it also provides me with a deeper understanding of it. All because the lecturer's explanation is simply understandable, as it gives a lot of examples and stories that follow the explanation. But the one challenge for me while taking this course is to understand the context and vocabulary, since I'm not an English speaker. But overall, this course is good, based on the lecturing style (examples and contexts) that the lecturer showed to us.
Anas Boughaba

Behavioral finance really highlights how our emotions and cognitive biases influence financial decisions. It’s fascinating to see that even experienced investors are not purely rational and often make choices based on heuristics, overconfidence, or loss aversion. Understanding these psychological factors can help individuals and institutions make better investment strategies and avoid common pitfalls
Muneeb Shafique

“Behavioral Finance – The Role of Psychology in Financial Decision-Making offers an insightful look into how human behavior influences financial choices. The course clearly explains how cognitive biases, emotions, and social pressures can lead inves…

“Behavioral Finance – The Role of Psychology in Financial Decision-Making offers an insightful look into how human behavior influences financial choices. The course clearly explains how cognitive biases, emotions, and social pressures can lead investors away from purely rational decision-making. By combining real-world examples with foundational psychological theories, it helps learners understand common mistakes such as overconfidence, loss aversion, and herd behavior. The content is well-structured and easy to follow, making complex ideas accessible even for beginners. Overall, this course is highly valuable for anyone interested in improving financial decision-making and gaining a deeper understanding of the psychological factors behind markets.”
Juan Sanchez

“Behavioral Finance – The Role of Psychology in Financial Decision-Making” offers a clear, engaging overview of how biases distort our choices with money. The author connects classic concepts—loss aversion, overconfidence, mental accounting—to real-world investing mistakes, making theory feel practical and urgent. I especially liked the discussion of emotions during bubbles and crashes, and the simple frameworks for building better habits. At times, the treatment of statistics feels a bit light, and experienced readers may want depth. Still, as an introduction for students or everyday investors, it’s an insightful, accessible guide that encourages smarter, more self-aware decisions about risk and uncertainty.
Muneera Aleid

This course is very beneficial and insightful. It clearly explains how psychological factors affect financial decision-making and investor behavior. The content is well-structured, easy to understand, and supported by real-life examples. I found it especially useful for understanding biases and improving my thinking in finance and investments.
Priyanshu Batham

This course offers a clear and practical introduction to behavioral finance, focusing on how psychological biases influence investor behavior and market outcomes. The content is well structured, easy to follow, and supported with relevant examples. Concepts like overconfidence, prospect theory, and regret theory are explained in a simple and engaging manner, making the course useful for both students and finance professionals seeking real world insights.
Levi Nuns

Avaliação sugerida (5 estrelas):
"Curso excepcional que combina psicologia e finanças, oferecendo uma visão profunda sobre como emoções e vieses cognitivos afetam as decisões financeiras. Recomendo fortemente para investidores e estudantes de economia que desejam entender melhor o comportamento financeiro humano e melhorar suas estratégias de investimento e planejamento financeiro muito bem elaborado.
Munirah Abdullah Alqunayah

Good and interesting point have been discussed
I have learned so much from this videos
Great free experience
Fahad Abdullah

The course gave me a clear understanding of how psychology influences financial decisions. I liked how it connected real-world investor behavior with theories of bias and risk. The explanations were simple yet insightful, making complex concepts easy to grasp. A great choice for anyone interested in finance and human behavior.
Eve Modra-O'Kane

great course that taught me so much about psychology well educating about the business decisions influend=ced low qiuality recording though.
Shrimay Patil

The Role of Psychology in Financial Decision-Making was an enlightening experience. It delved into how cognitive biases, emotions, and social factors influence financial choices, challenging traditional economic theories. The course provided a deep understanding of concepts like loss aversion, overconfidence, and herd behavior, blending psychology with practical financial scenarios. It sharpened my analytical skills and offered tools to make more informed decisions. A must for anyone keen on understanding the human element in finance and its impact on markets and investments.
Angela Rosati

Corso istruttivo ed illuminante docente estremamente professionale e competente
Comprensibile e chiaro in ogni definizione data esaustivo nei contenuti esplicitati nel corso consente gradevole stabilità di gestione dei contenuti affrontati
Tamara Moscoso

It was pretty good and with examples, should have been more dynamic. But bisides that it was pretty good.
Bethel Mkweza

the course has been a good experience, the idea of not only efficient markets and mathematical finance has changed my understanding of finance. in addition the insights on overconfidence has provided also some extra knowledge on how individual`s expectations and actual outcome create quite a difference.
Anna Kramorenko

I recently completed an online finance course, and it completely exceeded my expectations. Before taking the course, I felt intimidated by topics like investing, budgeting, and financial planning, assuming they were too complex for a beginner. Howev…

I recently completed an online finance course, and it completely exceeded my expectations. Before taking the course, I felt intimidated by topics like investing, budgeting, and financial planning, assuming they were too complex for a beginner. However, the course was structured in a clear, logical way that made even advanced concepts easy to understand.

The video lectures were concise and engaging, and the practical assignments helped me apply what I learned to my real-life financial situation. I particularly appreciated the modules on personal budgeting and passive investing, which gave me the confidence to finally start building an emergency fund and set up my first investment portfolio. The instructor was knowledgeable and explained everything without unnecessary jargon, making the learning process smooth and enjoyable.

Another highlight was the interactive community forum, where participants could ask questions and share experiences. It created a supportive environment that enhanced the overall learning experience.

Since finishing the course, I feel much more in control of my finances. I’ve set clear financial goals and now have a concrete plan to achieve them. I would highly recommend this course to anyone looking to gain financial literacy, regardless of their experience level. It is a worthwhile investment in yourself.