The course provides MSc students in Business Administration, Finance and Control with a systematic understanding of the theoretical and empirical foundations of behavioral economics, with a focus on applications in corporate finance, management, and management control. The course integrates standard finance training with insights from cognitive psychology and experimental economics, equipping students with analytical tools to understand and anticipate systematic deviations from rationality in financial markets, organizations, and managerial decision-making.

Knowledge and understanding: the student understands the main theoretical and empirical contributions of behavioral economics and their relationship with rational choice models; knows the cognitive mechanisms (heuristics, biases, dual process theory) that generate systematic deviations from rationality. Applying knowledge and understanding: the student can identify the impact of behavioral biases in investment decisions, managerial strategies, and incentive systems; can apply choice architecture principles to improve incentive design and corporate policies. Making judgments: the student critically evaluates the empirical robustness of behavioral findings and their implications for managerial and financial practice. Communication skills: the student can present and argue case analyses with reference to behavioral frameworks. Learning skills: the student is able to independently read and interpret research papers in behavioral economics applied to finance and management.

MODULE 1 - FOUNDATIONS: Standard rationality and anomalies. Bounded rationality. Dual process theory. Experimental methodology. MODULE 2 - RISK, UNCERTAINTY AND JUDGMENT: Expected Utility Theory and Allais paradox. Prospect Theory and CPT. Heuristics and biases. Overconfidence. Ambiguity aversion. Present bias. MODULE 3 - BEHAVIORAL ORGANIZATIONAL ECONOMICS: Social preferences (Fehr-Schmidt). Reciprocity. Crowding out of intrinsic motivation. Principal-agent under bounded rationality. Behavioral negotiation. MODULE 4 - BEHAVIORAL CORPORATE FINANCE: Market anomalies and limits to arbitrage. Investor psychology. Managerial overconfidence in M&A. Short-termism. Behavioral capital structure. Earnings management. MODULE 5 - APPLICATIONS: ORGANIZATIONS, DESIGN AND ETHICS: Choice architecture and nudging. Default effects. Groupthink and escalation of commitment. Behavioral ethics and compliance. Case study.

Required papers: Kahneman and Tversky (1979), Econometrica; Fehr and Schmidt (1999), QJE; Shleifer and Vishny (1997), Journal of Finance; Malmendier and Tate (2005, 2008), JF and JFE; Baker and Wurgler (2002), Journal of Finance; Madrian and Shea (2001), QJE; Graham, Harvey and Rajgopal (2005), JAE. Recommended reading: Kahneman (2011), Thinking, Fast and Slow; Thaler and Sunstein (2008), Nudge; Camerer, Loewenstein and Rabin, eds. (2004), Advances in Behavioral Economics; Barberis and Thaler (2003), Handbook of the Economics of Finance.

The course combines frontal lectures, discussion of selected empirical papers, in-class experiments with data collection and analysis, and real-world business case discussions (Group Case Study). Sessions integrate theoretical frameworks with critical analysis of empirical evidence and direct managerial applications.

COMPLIANT STUDENTS (attendance ≥70% via BEACON system) 1. Continuous Assessment — 1/3 of final grade: Group Case Study. The Group Case Study accounts for the entirety of the Continuous Assessment component. In case of absence or withdrawal, the grade for this component is 0 and contributes to the final average. 2. Final Written Exam — 2/3 of final grade The combination of Continuous Assessment and Final Written Exam is valid exclusively in the exam sessions scheduled at the end of Semester 1. In all subsequent sessions, including retake sessions, the grade is based entirely on the Final Written Exam (100%). NON-COMPLIANT STUDENTS and STUDENTS EXEMPT FROM ATTENDANCE Final Written Exam — 100% of final grade: same format as above (open-book, 120 minutes, three sections). In addition, non-compliant and exempt students are required to prepare two supplementary papers assigned by the instructor at the start of the semester. GENERAL RULES Grade refusal is not permitted. Withdrawal during the exam is allowed.

Having passed the exam.