Description

In the last two decades, economics and finance have witnessed a shift from the rational paradigm towards one that incorporates the possibility that the actions of economic actors are influenced by various behavioral biases documented in psychology. In particular, studies of the calibration of subjective probabilities find that individuals are overconfident: they tend to overestimate the precision of their knowledge and information, as well as their ability to improve outcomes. The principal objective of this course is to provide students with a theoretical framework to model overconfidence and related behavioral biases, and to study their impact on financial markets and firms. By relating the theoretical approaches to other non-behavioral theories, the course will also introduce students to classic models in economics and finance. Indeed, the course will start with a brief introduction to models of financial markets, and will successively look at a variety of topics about, or related to, overconfidence.

> course description

Schedule

The course will consist of lectures about specific theoretical papers on overconfidence in economics and finance, and is scheduled to run over 5 days with 10 lectures of 45-minutes. 

• 1 September: sessions 14:00-16:00
• 2 September: sessions 10:00-12:00
• 3 September: sessions 10:00-12:00
• 4 September: sessions 10:00-12:00
• 5 September: sessions 10:00-12:00

The course takes place during Aarhus Festuge, a major city-wide music and culture festival in Aarhus. As this is a particularly busy period, we recommend booking your accommodation well in advance.

Lecturer

Simon Gervais is a Professor of Finan coincides with https://www.aarhusfestuge.dk/en – a big music & culture festivace at The Fuqua School of Business.  Prior to joining Fuqua in 2003, he was an Assistant Professor of Finance at the Wharton School of the University of Pennsylvania.  He received his Ph.D. in finance from the University of California at Berkeley in 1997.

Professor Gervais’ research, which encompasses behavioral finance, corporate finance, and financial markets, has been published in leading finance and academic journals. Specifically, he studies the effects of behavioral biases on the decisions of firms and individuals, the regulation of financial markets, and the role of financial intermediaries. Professor Gervais has received the Barclays Global Investors/Michael Brennan Award for the best paper in the Review of Financial Studies.  He has also received awards for his teaching in daytime MBA and executive MBA programs.  Professor Gervais currently serves as an Associate Editor of the Journal of Financial Intermediation, served as President of the Financial Intermediation Research Society (FIRS) in 2022-23, and served on the Economic Advisory Committee of the Financial Industry Regulatory Authority (FINRA) from 2010 until 2016.

ECTS credits

For students to get 5 ECTS for the course, they are expected to hand in a preliminary version of a paper that includes their own model of overconfidence or other biases in financial economics.

Registration: please register no later than 15 August 2025: https://events.au.dk/modelingoverconfidence/signup

The course is free of charge for DGPE members from AU, KU, CBS, SDU, AAU - and for PhD students from Economics Departments at Nordic universities outside Denmark.

The course fee is EUR500 for other participants.

Contact

Academic: Stefan Hirth, shirth@econ.au.dk

Administrative: Susanne Christensen, sch@econ.au.dk