Financial Literacy: Behavioral Finance and Financial Decision-Making
Description
This subject builds advanced competency in understanding how cognitive and emotional biases influence financial decisions and investment outcomes. It explains key behavioral biases, herd behavior in markets, and emotional drivers of poor decisions. Learners design disciplined, rules-based frameworks and behavioral checklists to reduce errors and support long-term wealth creation.
Learning Objectives
Upon successful completion of this subject, learners will be able to: (1) identify and describe key behavioral biases such as availability, anchoring, overconfidence, confirmation bias, loss aversion, and herding, (2) explain Prospect Theory and loss aversion and how they impact risk-taking, (3) recognize herd behavior, FOMO, and panic selling in markets, (4) describe how emotions like fear, greed, and regret influence investing, (5) recognize overconfidence and illusion of control in trading and stock picking, (6) explain mental accounting, framing, and anchoring in personal finance contexts, (7) design rules-based investment and rebalancing processes that reduce emotional decisions, (8) construct behavioral checklists and safeguards to audit decisions before acting, and (9) adopt a long-term wealth mindset that emphasizes patience, compounding, and consistency.