Agenda

Management Lecture held by Prof. Shabnam Mousavi, Johns Hopkins University and Max Planck Institute, Berlin.
The Management Lecture will be followed by a PhD talk for PhD students 

Management Lecture: Financial Regulation and Risk Management: A Behavioral View

Financial regulations are designed to achieve one specific goal: managing the operational risk of financial institutions. Risk management involves assessment of existing as well as forthcoming risks, and development of methods to reduce and tame risk. I will juxtapose the existing theory underlying the scientific approach to risk assessment and operational rules in firms with the evidence of practice in this area. A behavioral approach to the study of risk management allows us to move beyond the mathematics of risk and logic of managing risk to view the underlying psychological inclinations that shape important and consequential decisions observed in the field. In particular, behavioral insights that rely on distinction between risk and uncertainty and evaluation of heuristics enrich our existing framework and enhance our risk management tools. 

Suggested Readings:
Mousavi, S.; Gigerenzer, G.; and R. Kheirandish (2017). Rethinking Behavioral Economics through Fast-and-Frugal Heuristics. In R. Frantz, S. Chen, K. Dopfer, and S. Mousavi (Eds.) Routledge Handbook of Behavioral Economics. Routledge. 280-296.
Mousavi, S.; and H. Shefrin (2010). Prediction Tools: Financial Market Regulation, Politics, and Psychology. Journal of Risk Management in Financial Institutions 3(4). 318-333.

PhD TALK: Simple Rules that Shape Managers’ Behavior