Finance for Normal People: How Investors and

Transcript:Finance for Normal People: How Investors and:
Finance for Normal People: How Investors and Markets Behave Introduction and Chapter 1 Finance For Normal People: How Investors and Markets Behave Introduction: What is Behavioral Finance? Part 1: Behavioral People are Normal People Chapter 1: Normal people Chapter 2: Our wants for utilitarian, expressive, and emotional benefits Chapter 3: Cognitive shortcuts and errors Chapter 4: Emotional shortcuts and errors Chapter 5: Correcting cognitive and emotional errors Finance For Normal People: How Investors and Markets Behave Chapter 6: Experienced happiness, life-evaluation, and choices: Expected Utility Theory and Prospect Theory Chapter 7: Behavioral Finance Puzzles: The dividend puzzle, the disposition puzzle, and the puzzles of dollar-cost-averaging and time-diversification Finance For Normal People: How Investors and Markets Behave Part 2: Behavioral Finance in Portfolios, Life-Cycles, Asset Prices, and Market Efficiency Chapter 8: Behavioral portfolios Chapter 9: Behavioral life-cycle of saving and spending Chapter 10: Behavioral asset pricing Chapter 11: Behavioral market efficiency Chapter 12: Lessons of behavioral finance Foundation blocks of standard and behavioral finance Standard finance 1. People are rational Behavioral finance 1. People are normal Foundation blocks of standard and behavioral finance Standard finance 2. People construct portfolios as described by mean-variance portfolio theory, where people’s portfolio wants include only high expected returns and low risk Behavioral finance 2. People construct portfolios as described by behavioral portfolio theory, where people’s portfolio wants extend beyond high expected returns and low risk, such as for social responsibility and social status Foundation blocks of standard and behavioral finance Standard finance 3. People save and spend as described by standard life-cycle theory, where people find it easy to find and follow the right way to save and spend Behavioral finance 3. People save and spend as described by behavioral life-cycle theory, where impediments, such as weak self-control, make it difficult to find and follow the right way to save and spend Foundation blocks of standard and behavioral finance Standard finance 4. Expected returns of investments are accounted for by standard asset pricing theory, where differences in expected returns are determined only by differences in risk Behavioral finance 4. Expected returns of investments are accounted for by behavioral asset pricing theory, where differences in expected returns are determined by more than differences in risk, such as by levels of social responsibility and social status Foundation blocks of standard and behavioral finance Standard finance 5. Markets are efficient, in the sense that prices equal values in