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for a past academic year. Please see the current academic year for up to date information.
| Unit name |
Behavioural Finance |
| Unit code |
EFIM30062 |
| Credit points |
10 |
| Level of study |
H/6
|
| Teaching block(s) |
Teaching Block 1 (weeks 1 - 12)
|
| Unit director |
Dr. Sonny Biswas |
| Open unit status |
Not open |
| Pre-requisites |
None
|
| Co-requisites |
None
|
| School/department |
School of Accounting and Finance - Business School |
| Faculty |
Faculty of Social Sciences and Law |
Description including Unit Aims
The objective of the unit is to provide an understanding of psychological biases which affect financial decision-making and to consider the related empirical evidence. It will introduce to students some long-standing puzzles in Finance (such as the Equity Premium Puzzle) and discuss the resolution of these puzzles using behavioural models. It will also cover topics in Corporate Finance such as consequences of over-confident corporate managers on investment and financing decisions of firms. Finally, it will provide a behavioural perspective on the Global Financial Crisis of 2007-09.
The aims of the unit are to:
1. Provide students with the tools to enable them to detect the presence of systematic biases in individual and group decision-making.
2. Enable students to critique models in Finance which assume perfect rationality.
Intended Learning Outcomes
At the end of the unit students will be expected to be able to:
- Critically review the Efficient markets hypothesis and associated empirical irregularities.
- Explain how heuristics lead to systematic biases.
- Apply an understanding of systematic biases to show how they can be exploited to make profits in financial markets.
- Evaluate the appropriateness of behavioural assumptions in different contexts.
- Compare and contrast the role of behavioural and rational theories to explain observed outcomes in corporate finance.
- Analyse, using understanding of cognitive biases, the role of behaviour in exacerbating global financial events
Teaching Information
Teaching will be delivered through a combination of synchronous and asynchronous sessions including lectures, tutorials, drop-in sessions, discussion boards and other online learning opportunities
Assessment Information
This unit will be assessed by 100% exam
Reading and References
There is no one textbook that covers everything we do in the course, but we will reference the following, amongst others.
Burton, E. and Shah, S. (2013) Behavioural finance: Understanding the social, cognitive and economic debates, Wiley.
Ackert, L.F. and Deaves, R. (2009) Behavioural finance: Psychology of decision making and markets, South-Western.
Shefrin, H. (2007) Behavioural corporate finance: decisions that create value, McGraw-Hill.
Damodaran, (2010) Applied corporate finance, John Wiley & Sons.
Malkiel, B. (2008) A random walk down wall street: The time-tested strategy for successful investing, Norton.
