AI-Augmented Behavioural Finance Pedagogy: Transforming Undergraduate and Postgraduate Classrooms through Simulation-Based Learning

The rapid integration of Artificial Intelligence (AI) into higher education has transformed how business and management subjects are taught and learned. In finance education, traditional teaching methods often emphasize numerical calculations and theoretical frameworks while offering limited opportunities for experiential and behavioral learning. In this case study, the authors present a real classroom-based pedagogical intervention implemented in a course for undergraduate and postgraduate students at Commerce and Management Institutes in India, where AI tools and behavioral finance simulations through games were integrated into teaching practices to improve student engagement, analytical thinking, and practical decision-making skills. This case study emerged from observations by the teaching faculty who taught Behavioural Finance courses to undergraduate and graduate students, who frequently struggled to connect financial theories with real-world investment behaviour and market psychology. In an attempt to make students show their interest in learning this kind of course, which requires understanding the fundamentals of Psychology, which is a prerequisite for this course. To address these challenges, AI-assisted simulations, AI-generated market scenarios, interactive case discussions, and behavioural finance activities were introduced into the classroom in the form of a game. Students were exposed to emotionally driven financial decision-making situations, such as panic selling, herding behaviour, overconfidence bias, and speculative investment trends, through AI-generated business narratives and stock market simulations. The teaching faculty made an attempt through gamification as an intervention by adopting a simulation-based learning framework. Based on the authors' experience in teaching behavioural finance courses, a simulation was created using AI. This AI-generated investment simulation scenario was used as a pilot study in the real classroom. The students actively participated in games and were able to make decisions rather than absorb theoretical content. AI tools were used to generate realistic market situations, investment dilemmas, and personalised learning prompts that encouraged critical analysis and collaborative problem-solving. The results demonstrated and presented active classroom participation, improved conceptual understanding, enhanced critical thinking abilities, and greater student interest in finance subjects. Students reported that the integration of AI made finance learning more relatable, practical, and interactive. This case also discusses ethical concerns, faculty adaptation challenges, limitations of AI-generated learning environments, and recommendations for responsible AI integration in finance education. This case study contributes to the growing discourse on gamification through AI-enabled pedagogy by demonstrating how behavioural finance and AI can be combined to create immersive and mock experiential learning experiences in management education.