Erratum to: Behavioral Finance and Financial Literacy: Educational Implications of Biases in Financial Decision Making

Abstract

Decision making competence is a central objective of economic education in general and financial education in particular. Children and young people should be enabled to make the most rational decisions possible, in economic life situations (Retzmann et al. 2010; CEE 2013). This particularly relates to financial decision making situations, because these are often characterized by a high level of complexity, and the consequences of wrong decisions have direct material effects. The field of behavioural economics deals with the systematic research of irrational decisions within the economic sciences. Over the past few years, however, the emergence of behavioural economics and behavioural finance has supplemented the rational choice paradigm with psychological aspects, and also, in part, called it into question. The chapter, as outlined here, shall highlight whether and to what extent new theoretical approaches of behavioural finance are changing the conceptual understanding and the subject area of financial literacy. Initially, rational decision making competence will be described in more detail as an objective of financial education, the relationship of rational choice and behavioural economics will be clarified and the basic findings on behavioural finance for decision making will be presented. On the basis of this, relevant anomalies, biases and heuristics for the example of financial investing will be revealed, and implications for the education process will be sketched out. The typical three phases in the process of decision making serve as systematization here: Information perception, information processing and evaluation and decision making. The exemplary analysis shows that knowledge about typical anomalies, biases and heuristics on an individual level can have an effect on the quality of financial decisions.