Durham University
Programme and Module Handbook

Undergraduate Programme and Module Handbook 2018-2019 (archived)

Module ECON3361: Behavioural Finance

Department: Business School (Economics and Finance)

ECON3361: Behavioural Finance

Type Tied Level 3 Credits 20 Availability Available in 2018/19 Module Cap None. Location Durham
Tied to NN43
Tied to N305
Tied to N306
Tied to N307
Tied to N302
Tied to N304
Tied to N400
Tied to N402
Tied to N403
Tied to N405


  • Corporate Finance


  • None

Excluded Combination of Modules

  • None


  • The module seeks to:
  • Provide students with knowledge and understanding of theoretical and empirical challenges to the efficient markets hypothesis
  • Present limits to arbitrage and psychology as key pillars of Behavioural Finance
  • Provide the opportunity for students to critically evaluate relevant theoretical and empirical literature
  • Offer the opportunity to develop key skills


  • Review of the Efficient Markets Hypothesis: a major building block of the modern theory of financial economics
  • Limits to Arbitrage
  • Concepts from Psychology: Beliefs and Preferences
  • Excess Volatility
  • Noise Trader Risk
  • Closed End Fund Puzzle
  • Underreaction and Overreaction
  • Excessive Trading
  • Speculative Bubbles
  • Model of Investor Sentiment
  • Equity Premium Puzzle as myopic risk aversion
  • The Future of Behavioural Finance

Learning Outcomes

Subject-specific Knowledge:
  • By the end of this module students should be able to:
  • Understand the key concepts and issues in behavioural finance
  • Appreciate the key theoretical and empirical literature in behavioural finance
  • Have practiced skills of problem-solving and critical thinking.
Subject-specific Skills:
  • Explain and interpret key implications of theoretical and empirical literature in Behavioural Finance
  • Construct and present critical evaluations of key academic papers in Behavioural Finance.
Key Skills:
  • Examples are provided to demonstrate how students will have the opportunity to develop the following key skills:
  • Written Communication – by completing formative and summative assignments
  • Interpersonal Communication – using email to communicate with tutors and other students; discussing concepts and issues in classes with tutors and the student group
  • Oral Presentation – by active participation in class discussions and contributing to class presentations
  • Planning and Organising – by timely preparation for classes, adhering to deadlines, downloading relevant material and preparing for lectures and assessment.
  • Problem Solving – by applying the necessary analytical techniques in addressing class problems and preparing assignments
  • Initiative – by searching relevant literature and other information in preparation for the formative and summative assessments
  • Computer Literacy – by word-processing the assignments; accessing and downloading teaching material from DUO; using email to communicate with tutors and other students

Modes of Teaching, Learning and Assessment and how these contribute to the learning outcomes of the module

  • Teaching is by lectures and seminars. Learning takes place through attendance at lectures, preparation for and participation in seminar classes, and private study. Formative assessment is by means of a written assignment. Summative assessment is by means of a written examination and an assignment.

Teaching Methods and Learning Hours

Activity Number Frequency Duration Total/Hours
Lectures 19 weekly 1 hour 19
Revision Lecture 1 weekly 1 hour 1
Seminars 8 4 per term 1 hour 8
Preparation and Reading 172
Total 200

Summative Assessment

Component: Examination Component Weighting: 60%
Element Length / duration Element Weighting Resit Opportunity
One written assignment 1 hour 30 minutes 100%
Component: Assignment Component Weighting: 40%
Element Length / duration Element Weighting Resit Opportunity
Assignment 1500 words max 100%

Formative Assessment:

One assignment of not more than 1,500 words

Attendance at all activities marked with this symbol will be monitored. Students who fail to attend these activities, or to complete the summative or formative assessment specified above, will be subject to the procedures defined in the University's General Regulation V, and may be required to leave the University