Module ECON3361: Behavioural Finance

Department: Economics and Finance

ECON3361: Behavioural Finance

Tied To

• N302: Accounting and Finance with Placement Year
• N304: Accounting and Finance with Study Abroad
• N305: Finance
• N306: Finance with Placement Year
• N307: Finance with Study Abroad
• N400: Accounting (see Undergraduate Handbook 2019-2020 for details)
• N402: Financial Accounting (see Undergraduate Handbook 2019-2020 for details)
• N403: Financial Accounting with Placement Year (see Undergraduate Handbook 2019-2020 for details)
• N405: Financial Accounting with Study Abroad (see Undergraduate Handbook 2019-2020 for details)
• NN43: Accounting and Finance

Pre-requisites

Corequisites

Excluded Combinations

Aims

• 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

Content

• 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

• 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.

• 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.

• 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 two written assignments.

Teaching Methods and Learning Hours

Summative Assessment

Formative Assessment

One group report and 10-minute filmed presentation.