The Psychology of Finance

Global stock markets are constantly fluctuating. Our remote learning course will help you understand the psychological influences that drive market changes: the behavior of investors and financial analysts and how it impacts market outcomes.

After completing the course, you will be able to: 

• Understand the psychology behind financial decisions made by business leaders and investors
• Neutralize relevant biases
• Make and encourage better financial decisions
• Explain the consumer choice theory
• Differentiate mental models related to behavioral finance
   

Our curriculum is designed to teach you the biases that influence decision-making processes and how to apply this knowledge to make unbiased, rational decisions that have lasting impacts across a range of investment scenarios.

You will learn to:

• Describe concepts such as utility, probability weighting, the certainty effect, and survivorship bias, as well as risk, gains, and losses
• Explain the causation/correlation error, the mental error in probability weighting, the consequences of the anchoring bias, over-trading due to overconfidence, the equity premium puzzle, and active vs. passive mutual funds
• Evaluate subjective vs. absolute probabilities and the framing and reversal of preferences

Behavioral finance proposes that psychological influences and biases affect the financial behaviors of investors and financial practitioners. All types of market anomalies, especially those related to the stock market, can be explained through these psychological factors. In a time of increased uncertainty and market volatility, behavioral finance is rapidly growing in practice. Advisors seek the need to incorporate this analysis into their wealth management processes to improve client experience, deepen relationships, and deliver better results. In a recent survey targeted at financial advisors, 81% of them said they were using behavioral finance techniques to build their clients’ portfolios and communicate with them.