# 3907431: Financial Decision Making

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Semester:SS 15
Type:Module
Language:English
ECTS-Credits:6.0
Scheduled in semester:4
Semester Hours per Week / Contact Hours:60.0 L / 45.0 h
Self-directed study time:135.0 h

## Description

Decision Theory:

• Expected utility theory
• Mean-variance theory
• Prospect theory.
• Asymmetric information
• Market efficiency
• Behavioral biases

Quantitave analysis:
• Data collection
• Descriptive statistics
• Inferential statistics
• Introduction to R

## Qualifications

• Know the most prominent decision theories. They are aware of the important human biases in financial decision making.
• Understand how rational solutions can be found by applying classical decision models and are aware of the differences between these model solutions and the solutions humans normally come up with.
• Solve decision problems by using DT models and quantitative methods. They find the strategic aspect of a problem and transform it into a simplified game/problem.
• Analyze decision situations and decide which approaches are useful to handle them.
• Evaluate of Investments with EUT, MVT and PT.
• Know methods in decision theory.
• Know quantitative analysis methods to conduct financial research.
• Explain and interpret the assumptions of these methods.
• Use theories, methods and models on unknown decision situations. Calculate optimal solutions and equilibria.
• Compare different methods for measuring and controlling risk and uncertainty in decision processes.
• Evaluate decision and analysis methods in mini cases and find appropriate models for solving typical problems.
• Understand and critically discuss the arguments of fellow students.
• Work on financial decision making problems and solve mini cases as well as examples in small groups and discuss them in front of class.
• Evaluate the solutions of fellow students, explain carefully why they might be seen as right or wrong.
• Understand the flaws and problems of fellow students, react on critical discussion without being offended.
• React to other opinions and solutions and defend their own solution without being offended.
• Listen carefully, read and repeat, practice until they understand the logic and mathematics the models are based upon.
• Work together and motivate other students who tend to give up as a reaction to the difficulty of mathematical problems.
• Take responsibility and organize/explain solutions to others

Knowledge prerequisites:

Modul Mikroökonomie

• Preferences and Utility
• Decisions under risk and uncertainty

## Prerequisities

The following conditions need to be met prior to registering for the module:

• successful completion of English I
• successful completion of additional first year programme modules amounting to at least 45 credit points.

Exception for SS 13: only 39 additional credits.