ITF 413 | Course Introduction and Application Information - Department of International Trade and Finance

Course Name

Introduction to Behavioral Finance

Code	Semester	Theory (hour/week)	Application/Lab (hour/week)	Local Credits	ECTS
ITF 413	Fall/Spring	3	0	3	5

Prerequisites	None
Course Language	English
Course Type	Elective
Course Level	First Cycle
Mode of Delivery	-
Teaching Methods and Techniques of the Course	Discussion Case Study Q&A Lecture / Presentation
National Occupation Classification	-
Course Coordinator	Prof. Dr. Gülin VARDAR
Course Lecturer(s)	Prof. Dr. YENER COŞKUN
Assistant(s)	Arş.Gör. BİRCE TEDİK KOCAKAYA

Course Objectives	The purpose of this course is to introduce the student to the new field of behavioralfinance. In the past, one of the dominant assumptions in finance was that all investors acted rational and the markets were perfectly efficient. Because of advances in behavioral finance this view is being increasingly called into question. New work in thisarea has major implications for financial decisionmakers.
Learning Outcomes	The students who succeeded in this course; Explain key concepts and theories in behavioral finance. Analyze how psychological factors and cognitive biases affect financial decisions. Evaluate the influence of investor behavior on market efficiency and asset prices. Apply behavioral concepts to improve financial decision-making. Interpret how individual and organizational behavior impacts investment and risk tolerance.
Course Description	Behavioral finance is the application of psychology to investment behavior. It explores how various behavioral concepts such as behavioral frames, biases and heuristics impact individual investors’ decisions, market dynamics and corporate decision makings.
Related Sustainable Development Goals

Course Category	Core Courses
	Major Area Courses
	Supportive Courses	X
	Media and Management Skills Courses
	Transferable Skill Courses

Week	Subjects	Related Preparation
1	Introduction to Behavioral Finance	Baker, H. K., & Nofsinger, J. R. (2010). Behavioral finance: an overview. Behavioral finance: Investors, corporations, and markets, 1-21.
2	Theoretical Map of Behavioral Finance	Fama, E. F. (1970). Efficient capital markets: A review of theory and empirical work. Journal of Finance, 25(2), 383–417; Kahneman, D., & Tversky, A. (1979). Prospect theory: An analysis of decision under risk. Econometrica, 47(2), 263–291; Lo, A. W. (2004). The adaptive markets hypothesis. Journal of Portfolio Management, 30(5), 15–29.; Shefrin, H., & Statman, M. (2000). Behavioral portfolio theory. Journal of Financial and Quantitative Analysis, 35(2), 127–151; Shleifer, A., & Vishny, R. W. (1997). The limits of arbitrage. Journal of Finance, 52(1), 35–55.; Tversky, A., & Kahneman, D. (1992). Advances in prospect theory: Cumulative representation of uncertainty. Journal of Risk and Uncertainty, 5(4), 297–323.
3	Rational Investors and Irrational Investors	Statman, M. (2019). Behavioral Finance. CFA Institute. (Chapter 1 &2); Kumar, S., & Goyal, N. (2016). Evidence on rationality and behavioural biases in investment decision making. Qualitative Research in Financial Markets, 8(4), 270-287.; Hirshleifer, D., Subrahmanyam, A., & Titman, S. (2006). Feedback and the success of irrational investors. Journal of financial economics, 81(2), 311-338.
4	Cognitive Shortcuts and Errors	Statman, M. (2019). Behavioral Finance. CFA Institute. (Chapter 3); https://thedecisionlab.com/biases; Ahmad, U., Van Keulen, M., Briassouli, A., & Saad, M. (2025). Cognitive biases, Robo advisor and investment decision psychology: An investor's perspective from New York stock exchange. Acta psychologica, 256, 105048.
5	Emotional Shortcuts and Errors	Statman, M. (2019). Behavioral Finance. CFA Institute. (Chapter 4); Robert Plutchik, “The Nature of Emotions: Human Emotions Have Deep Evolutionary Roots, a Fact That May Explain Their Complexity and Provide Tools for Clinical Practice,” American Scientist 89, no. 4 (July/August 2001): 344–50. ; Jennifer S. Lerner, Ye Li, and Elke U. Weber, “The Financial Costs of Sadness,” Psychological Science 24, no. 1 (January 2013): 72–79
6	Behavioral Life Cycle of Saving and Spending	Statman, M. (2019). Behavioral Finance. CFA Institute. (Chapter 7); Shefrin, H. M., & Thaler, R. H. (1988). The behavioral life‐cycle hypothesis. Economic inquiry, 26(4), 609-643.
7	Behavioral Asset Pricing	Statman, M. (2019). Behavioral Finance. CFA Institute. (Chapter 8); Shefrin, H., & Statman, M. (1994). Behavioral capital asset pricing theory. Journal of financial and quantitative analysis, 29(3), 323-349.; Meir Statman, Kenneth L. Fisher, and Deniz Anginer, “Affect in a Behavioral Asset Pricing Model,” Financial Analysts Journal 64, no. 2 (March/April 2008): 20–29.
8	Midterm Exam
9	Beliefs, Biases and Heuristics: Noise Trading, Overconfidence and optimism	Heger, S. A., & Papageorge, N. W. (2018). We should totally open a restaurant: How optimism and overconfidence affect beliefs. Journal of Economic Psychology, 67, 177-190.; Malmendier, U., & Tate, G. (2005). CEO overconfidence and corporate investment. The journal of finance, 60(6), 2661-2700.; Malmendier, U., & Tate, G. (2005). Does overconfidence affect corporate investment? CEO overconfidence measures revisited. European financial management, 11(5), 649-659.; Schumacher, C., Keck, S., & Tang, W. (2020). Biased interpretation of performance feedback: The role of CEO overconfidence. Strategic management journal, 41(6), 1139-1165.; Black, F. (1986). Noise. The journal of finance, 41(3), 528-543.; Shleifer, A., & Summers, L. H. (1990). The noise trader approach to finance. Journal of Economic perspectives, 4(2), 19-33.
10	Beliefs, Biases and Heuristics: Overreaction and/or Underreaction; Momentum, Herding	Forbes, Chapter 9 &10&11; Afrouzi, H., Kwon, S. Y., Landier, A., Ma, Y., & Thesmar, D. (2023). Overreaction in expectations: Evidence and theory. The Quarterly Journal of Economics, 138(3), 1713-1764.; Akinsomi, O., Coskun, Y., & Gupta, R. (2018). Analysis of herding in REITs of an emerging market: the case of Turkey. Journal of Real Estate Portfolio Management, 24(1), 65-81
11	Behavioral real estate	Salzman, D., & Zwinkels, R. C. (2017). Behavioral real estate. Journal of real estate literature, 25(1), 77-106.; Black, R., Brown, G., Diaz, J., Gibler, K., & Grissom, T. (2003). Behavioral research in real estate: a search for the boundaries. Journal of Real Estate Practice and Education, 6(1), 85-112.
12	Applications and Contemporary Issues in Behavioral Finance: Digital Advice, Social Media, and Speculative Trading, behavioral Sustainable Investing	Barber, B. M., Huang, X., Odean, T., & Schwarz, C. (2022). Attention-induced trading and returns: Evidence from Robinhood users. The Journal of Finance, 77(6), 3141–3190. https://doi.org/10.1111/jofi.13183; D’Acunto, F., Prabhala, N., & Rossi, A. G. (2019). The promises and pitfalls of robo-advising. The Review of Financial Studies, 32(5), 1983–2020. https://doi.org/10.1093/rfs/hhz014; Hartzmark, S. M., & Sussman, A. B. (2019). Do investors value sustainability? A natural experiment examining ranking and fund flows. The Journal of Finance, 74(6), 2789–2837. https://doi.org/10.1111/jofi.12841; Pedersen, L. H., Fitzgibbons, S., & Pomorski, L. (2021). Responsible investing: The ESG-efficient frontier. Journal of Financial Economics, 142(2), 572–597. https://doi.org/10.1016/j.jfineco.2020.11.001
13	Presentations
14	Presentations
15	Semester Review
16	Final Exam

Course Notes/Textbooks

Articles and Book chapters indicated above, presentation notes, current news

Suggested Readings/Materials

Forbes, W., 2009. Behavioural Finance. New York: John Wiley & Sons. ISBN: 978-0-470-02804-9

Statman, M. (2019). Behavioral Finance: Second Generation. CFA Institute. https://rpc.cfainstitute.org/sites/default/files/-/media/documents/book/rf-publication/2019/behavioral-finance-the-second-generation.pdf

See the materials in the 3rd Column in Weekly Subjects and Related Preparation Studies

Semester Activities	Number	Weigthing
Participation
Laboratory / Application
Field Work
Quizzes / Studio Critiques
Portfolio
Homework / Assignments	1	30
Presentation / Jury	1	30
Project
Seminar / Workshop
Oral Exams
Midterm
Final Exam	1	40
Total

Weighting of Semester Activities on the Final Grade	2	60
Weighting of End-of-Semester Activities on the Final Grade	1	40
Total

Semester Activities	Number	Duration (Hours)	Workload
Theoretical Course Hours (Including exam week: 16 x total hours)	16	3	48
Laboratory / Application Hours (Including exam week: '.16.' x total hours)	16		0
Study Hours Out of Class	14	2	28
Field Work			0
Quizzes / Studio Critiques			0
Portfolio			0
Homework / Assignments	1	24	24
Presentation / Jury	1	20	20
Project			0
Seminar / Workshop			0
Oral Exam			0
Midterms			0
Final Exam	1	30	30
		Total	150

#	Program Competencies/Outcomes	* Contribution Level
#	Program Competencies/Outcomes	1	2	3	4	5
1	To be able to identify and analyze problems in the field of trade and finance, and to develop solutions.	-	-	-	X	-
2	To be able to apply theoretical and practical knowledge of international trade and finance to real-world professional contexts.	-	-	-	X	-
3	To be able to critically analyze global market developments and evaluate their implications for business and policy.	-	-	-	-	-
4	To be able to collect, analyze, and interpret financial and economic data by using digital and information technologies effectively.	-	-	-	-	-
5	To be able to understand and interpret legal frameworks, regulations and practices relevant to international trade and finance.	-	-	-	-	-
6	To be able to anticipate, define, and manage financial and trade-related risks through informed decision-making.	-	X	-	-	-
7	To be able to acquire and use verbal, written, and numerical skills effectively for the nature of international trade and finance program.	-	-	-	-	-
8	To be able to obtain, synthesize, and report trade- and finance-related information clearly and effectively.	-	-	-	-	-
9	To be able to contribute effectively as individuals, team members, and leaders in multidisciplinary environments.	-	-	-	-	-
10	To be able to evaluate trade and finance issues from ethical, social, and sustainability perspectives.	-	-	-	-	-
11	To be able to collect data in the areas of International Trade and Finance and communicate with colleagues in a foreign language ("European Language Portfolio Global Scale", Level B1).	-	-	-	-	-
12	To be able to speak a second foreign at a medium level of fluency efficiently.	-	-	-	-	-
13	To be able to relate the knowledge accumulated throughout human history to their field of expertise.	-	-	-	-	-