This two-day program teaches behavioral finance principles through lectures from renowned experts. Participants will learn how behavioral factors influence investment decisions and how to develop strategies that incorporate behavioral insights. Topics include financial bubbles, earnings manipulation, implementing behavioral approaches, and avoiding decisions with large downside risks. The program enables attendees to better understand investor behavior and market responses.

1. INVESTMENT DECISIONS AND BEHAVIORAL FINANCE:
Identifying and Capitalizing on Irrational Investment Practices
A cutting-edge program on behavioral finance, the revolutionary approach to investment
decision making. The program is taught by faculty who are major contributors to the field.

2. THE PROGRAM
Led by a faculty of renowned experts and Some of the topics and questions covered in
leading practitioners, Investment Decisions and prior sessions include:
Behavioral Finance presents a revolutionary
»»Understanding the new applied science of
science for investment decision making—
effective decision making.
behavioral finance. Participants learn the central
principles and latest findings of the psychology
»»How and why do financial bubbles develop,
and how can they be recognized?
of decision making under conditions of risk
and uncertainty, with attention to practical »»What erroneous assumptions underlie
applications for those responsible for many standard financial practices? How to
managing assets and constructing portfolios recognize and correct for the common earnings
for investment clients. These principles will manipulation strategies of corporate managers.
enable them to better understand what investors »»Investigating the ways other decision makers
actually do in a given set of circumstances— and companies have implemented behavioral
such as the dramatic uncertainties associated finance approaches—and how to develop an
with debt crises in nations around the world— implementation strategy best suited to your
versus what rational analysis prescribes. interests and capabilities.
Equally important, the program explains how »»How does the function of the brain affect
markets respond given the natural proclivities decisions, including financial decisions?
of investors. The recent meltdown in financial »»How to avoid making decisions that are both
markets, including the collapse or near collapse bad and have large down-side potential.
of major financial institutions can best be
»»Managing the behavioral decision propensities
understood using a behavioral perspective.
of your clients.
The program provides fundamentals so that
participants can develop their own strategies »»Exploring behavioral explanations for past
for asset allocation, diversification, and client financial crises and seeing signs for possible
development and communication. future challenges.
Program Dates: Faculty Chair: Richard Zeckhauser,
October 13–14, 2011 Frank P. Ramsey Professor of Political
Economy
Tuition: $4,000

3. “ ny person seeking to understand human behavior
A
must attend this program. If Executive Education is
food for the head, this program is a feast.”
Hans F. Olsen, Chief Investment Officer, Bingham Legg Advisors
THE CURRICULUM
Program sessions change from year to year in the basic facts about financial markets. We will
order for the class to stay up-to-date with the explore how investment practices should differ
most important research and issues. The 2011 once we recognize the lack of rationality of
session will address policy procrastination and financial markets and their inhabitants.
debt crises. Recent session topics:
Investing in the Unknown and the Unknowable
On Behavioral Economics, Financial Decision The major profit opportunities in the modern
Traps, and Systematic Irrationalities world come from investing where professional
An introduction to the science of behavioral analysts fear to tread, hence there is modest
economics and its application to financial competition from the investment community.
management. It explores how behavioral Often this entails “sidecar” investments, where
approaches to the market differ from so-called your special relationships with knowledgeable
conventional or “rational” approaches. others enable you to be pulled along by a
powerful “motorcycle.” Many such highly
The Psychology of Individual Investment profitable investments will be in illiquid assets.
Decision Making
The conventional wisdom about investment Confessions of a Value Manager
risk is that it is a function of the age, wealth, This presentation examines global investment
income requirements, and time horizons of the strategy in relation to investor psychology. It also
investor. Therefore, investment managers need includes practical lessons for current markets.
only to determine the appropriate level of risk
for the client, matching the portfolio to it. In fact, Behavioral Explanations for the Financial Crisis
extensive behavioral research shows that risk Efficient market theory could not explain this
attitudes derive substantially from overestimating unforeseen severe collapse in security prices
(bold forecasting) or underestimating (timid despite little new information about the real
decisions). We will examine the implications economy. Behavioral finance provides critical
of this research for financial managers. insights. Two arresting phenomena are addressed:
the cascade of losses from the housing sector
Managing and Investing Rationally to the entire financial system, and disastrous
in a Non-rational World decision making by leading financial institutions.
Research suggests that standard finance is based
on incorrect assumptions and fails to capture

4. Richard Zeckhauser, Faculty Chair
PROGRAM FACULTY
Richard Zeckhauser, Faculty Chair College, and serves on the Executive Committee
Frank P. Ramsey Professor of Political of the NYU/Stern Graduate School of Business,
Economy, Harvard Kennedy School where he is an Adjunct Professor of Finance.
Professor Zeckhauser is a leading figure in risk
analysis, decision theory, and microeconomics. Iris Bohnet
He pioneered the studies of status quo bias, Academic Dean, Professor of Public Policy,
betrayal aversion, and threshold behavior, which and Director of Women and Public Policy
Program, Harvard Kennedy School
are central subjects for behavioral finance. He
has put his understanding to work as a board Iris Bohnet is a behavioral economist
member of small high-tech companies and a whose current research focuses on trust,
principal of investment firms. He is an elected its determinants, and its relevance for
fellow of the Institute of Medicine (National negotiation and for individual and collective
Academy of Sciences), the American Academy decision making. She has run experimental
of Arts and Sciences, and the Econometric studies on five continents assessing how
Society, and the author or co-author of 12 individuals make decisions.
books and over 250 articles.
Chris Chabris
Richard Bernstein Assistant Professor of Psychology, Union
Chief Executive Officer, Richard Bernstein College and Adjunct Assistant Professor
Advisors LLC. of Neurology, Albany Medical College
Richard Bernstein has nearly 30 years’ Christopher Chabris is co-author of The Invisible
experience on Wall Street, including most Gorilla: And Other Ways Our Intuitions Deceive
recently as the Chief Investment Strategist Us, a New York Times bestseller and Editor’s
at Merrill Lynch & Co. He was voted to Choice. The experiment that inspired this book
Institutional Investor magazine’s annual earned him the Ig Nobel Prize in psychology.
“All-America Research Team” eighteen times, He writes from time to time for the Wall Street
including ten as the top-ranked analyst in Journal and other national publications. Until
his category. His book Style Investing: Unique 2007 he was a Lecturer and Research Associate
Insight into Equity Management is widely in the psychology department at Harvard. His
viewed as the seminal book on style-oriented research interests include collective intelligence,
investment strategies. He is a trustee of, and individual differences in cognition and decision
sits on, the investment committees of the making, and cognitive illusions, especially
Alfred P. Sloan Foundation and Hamilton illusions related to confidence.

5. David Laibson Michael Mauboussin
Professor of Economics, Harvard University Chief Investment Strategist, Legg Mason
Capital Management and Adjunct Professor,
David Laibson is a member of the Russell
Columbia Business School
Sage Behavioral Economics Roundtable, the
MacArthur Foundation Preferences Network, Michael Mauboussin is the author of Think
and the National Bureau of Economic Research. Twice: Harnessing the Power of Counterintuition
His research focuses on psychology and and More Than You Know: Finding Financial
economics, and he currently is working in the Wisdom in Unconventional Places—Updated and
fields of macroeconomics, decision and cognitive Expanded. More Than You Know was named one
sciences, behavioral finance, and experimental of “The 100 Best Business Books of All Time”
economics. His work on the time inconsistency of by 800-CEO-READ, one of the best business
individuals’ decisions has become a classic. books by BusinessWeek, and best economics
book by Strategy+Business. Mauboussin has been
Andrew W. Lo an adjunct professor of finance at Columbia
Harris & Harris Group Professor of Finance, Business School since 1993 and is on the faculty
MIT Sloan School of Management of the Heilbrunn Center for Graham and Dodd
Andrew Lo is director of the MIT Laboratory Investing. In 2009, Michael received the Dean’s
for Financial Engineering, a research associate Award for Teaching Excellence.
of the National Bureau of Economic Research,
a member FINRA’s Economic Advisory Gary Orren
Professor of Public Policy and Management,
Board, and founder and Chief Investment
Harvard Kennedy School
Strategist of AlphaSimplex Group, LLC. He
has published numerous articles in finance Gary Orren teaches and writes on public
and economics journals, and has written opinion, politics, and persuasion. He has worked
several books including The Econometrics in the United States and abroad as a pollster
of Financial Markets, A Non-Random Walk and strategist for candidates, interest groups,
Down Wall Street, and Hedge Funds: An government agencies, corporations, and news
Analytic Perspective. He is the recipient of organizations, including the New York Times and
numerous awards, including an Alfred P. Washington Post. He helped draft the rules for the
Sloan Foundation Fellowship, a Guggenheim presidential nomination process and assists ABC
Fellowship, the Paul A. Samuelson Awards, News in its election night forecasting. His books
and the James L. Vertin Award. include Equality in America: The View from the

6. PROGRAM FACULTY [Continued]
Top, Media and Momentum: The New Hampshire Management, where he was a global investment
Primary and Nomination Politics, The Electronic strategist and portfolio manager. Wood had
Commonwealth: The Impact of New Media served many years as Governor of the CFA
Technologies on Democratic Politics, and Media Institute, was Chairman of Financial Analysts
Polls in American Politics. Federation, and is currently a Trustee of the
CFAI Research Foundation.
Mark W. Riepe
Senior Vice President, Schwab Center for Dinner Speaker:
Financial Research and President, Charles Clifford Asness
Schwab Investment Advisory Managing & Founding Principal,
Mark Riepe, CFA, is a regular columnist for the AQR Capital Management
Journal of Financial Planning and his numerous Clifford Asness has been awarded the James R.
studies that have appeared in publications Vertin Award by the CFA, which is periodically
such as the Financial Analysts Journal and given to individuals who have produced a
The Journal of Portfolio Management. Prior to body of research notable for its relevance and
joining Schwab, he served as vice president with enduring value to investment professionals.
Ibbotson Associates, a Chicago-based financial Prior to co-founding AQR Capital Management,
consulting firm. He earned his bachelor’s degree Cliff was at Goldman, Sachs & Co. where he
in economics from the University of Chicago was a Managing Director and Director of
and his master’s in finance from the school’s Quantitative Research for the Asset Management
Graduate School of Business. Division. Cliff has authored articles on many
financial topics including multiple publications
Arnold S. Wood in The Journal of Portfolio Management and the
Founding Partner, President, and Chief Financial Analysts Journal. He is on the editorial
Executive Officer of Martingale Asset board of The Journal of Portfolio Management,
Management, L.P.
the editorial board of the Financial Analysts
Arnold S. Wood chairs the Management Journal, the governing board of the Courant
Committee of Martingale Asset Management, Institute of Mathematical Finance at NYU, the
L.P., in addition to being its Founding Partner, Board of the International Rescue Committee,
President, and Chief Executive Officer. Prior and is a trustee of the Manhattan Institute and
to Martingale, he was a Trustee and Senior the Atlas Society.
Vice President of Batterymarch Financial

7. “ articipating in this program is the best investment that
P
I have ever made in understanding market behavior.”
partha Sen, Senior Vice President, Bank of America
WHO SHOULD ATTEND REGISTRATION REQUIREMENTS
Investment Decisions and Behavioral Finance Please visit www.hks.harvard.edu/ee/bf to
is designed for senior decision makers in register. Early registration is encouraged.
the investment community. Ideal participants Registration forms received after the deadline
include investment company presidents, chief will be considered only if space remains in
investment officers, investment strategists, the class. This program is approved by the
portfolio and fund managers, pension plan CFA Institute and the CFP Board of Standards
executives, senior analysts and directors of for continuing education credits.
research, senior executives of corporations,
and high net worth private investors.
Past participants of the program and
practitioners of behavioral finance should
consider attending as the speakers change
from year to year. The material has been
significantly updated over the last three
years, incorporating the latest research
and applications of behavioral finance.
In cooperation with CFA Institute (www.cfainstitute.org), Harvard Kennedy School
Executive Education is pleased to offer a 10% discount on Investment Decisions and
Behavioral Finance tuition to CFA members. The program is endorsed by CFA Institute
and is approved by its Board of Standards for 15 continuing education credits.
Investment Decisions and Behavioral Finance is accepted by the CFP Board of
Standards for 15 credits.

8. www.hks.harvard.edu/ee/bf
“Leadership and learning are
indispensable to each other.”
John F. Kennedy
Executive Education Admissions
John F. Kennedy School of Government
Harvard University
79 JFK Street
Cambridge, MA 02138 USA
Phone: 617-496-0484
Fax: 617-495-3090
Email: hks_execed@harvard.edu