This is not a traditional finance or economics course but an overview into an emerging field of financial study. The course will be interactive and fun for all who are curious about the forces that drive economic mechanics.

What is Behavioral Finance and Economics? Generally, behavioral economists are interested in the same questions traditional economists are but without assuming that people are rational. Simply put, behavioral economists assume people behave in an economy in a more chaotic, confused and untidy fashion (think Homer Simpson) as opposed to a systematic or methodical person (think Mr. Spock). Over the past several decades, the field of finance has developed a successful paradigm based on the notions that investors and managers were generally rational and the prices of securities were generally "efficient." In recent years, however, anecdotal evidence as well as theoretical and empirical research has shown this paradigm to be insufficient to describe various features of "actual" financial markets.

When it comes to answering questions about the economy and in policy-making, behavioral economists look at the broader picture to include not only the traditional economic view but also what we know about human
nature: That people can have multiple rationalities, are emotional, myopic, and may be full of quirks in financial decision-making. The assumption is that finance and economics are not at all like physics. In finance, there are very few systematic "laws of nature" to be observed. We instead observe the effects of compounded human behavior and decision-making with emotion clouding our judgment in an open environment where shocks, jolts and surprises take place on an almost continuous basis.

Alongside mathematics, a new economic theory can be built using additional resources such as cognitive sciences and many other disciplines.

The reason for these additional views of the economy are that over the years, increasingly sophisticated mathematical models and derivative pricing strategies have been developed, but their credibility has become damaged due to recent financial crises. We will examine these mathematical models and theories that explain financial markets and discuss the bounds, credibility, limits, rise and grip of modern mathematics in explaining financial markets.