Behavioral Finance

Preface

This book was the product of five years of teaching “Behavioral Finance” to over 1,800 undergraduates at the University of Virginia. The course never had a textbook. In fact, the course was originally intended to be limited to, at most, 15 students due to the difficulty of the reading. By a strange quirk of the registration process, the course limit in the online registration system was altered to 300 and was quickly filled by eager students. It remains one of the most sought after courses at the University of Virginia. Who would have guessed?

When I first decided to offer Behavioral Finance as a course, I was driven by the amount of space that the subject was occupying in the leading finance journals. There was no book that I could find suitable for such a course, so the initial reading list was comprised solely of original sources—professional, academic journal articles. Somehow, this worked, and students continue to pack into this course that is offered every spring at the University of Virginia.

It dawned on me that if this course proved useful to our students, perhaps I should write a book summarizing my thoughts on Behavioral Finance in book form so that others might consider offering a similar course at their institution. In this spirit, I dedicate this book to all of my students—past, present, and future.

I would especially like to thank my co-author, Sunit Shah, whose brilliance and attention to detail has hopefully made up for much of my unintended carelessness. ...