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In this course, we will examine how people make predictable and repeatable mistakes in financial decision-making. We will describe the nature of these mistakes and their origin, using insights from psychology, neurosciences and experimental economics on how the human mind works. We will then discuss how incorporating these mistakes into our finance theories can markedly improve standard finance models studied in other courses.
We will also consider how understanding the functioning of the human mind allows us to design a better world –in particular, better stock markets, retirement and healthcare systems. As such, this course is markedly multidisciplinary, lying at the intersection of financial economics and cognitive sciences, with both experimental and theoretical components.