Modiwl ETB-3309:
Behavioural Finance
Behavioural Finance 2023-24
ETB-3309
2023-24
Bangor Business School
Module - Semester 2
10 credits
Module Organiser:
Bruce Vanstone
Overview
The module provides an introduction to Behavioural Finance as an alternative approach to explaining investors' decisions and behaviour, and financial market outcomes, based on psychological theory and evidence. This includes consideration of the Efficient Markets Hypothesis, market inefficiency and specific empirical anomalies; as well as Expected Utility Theory and Allais’ and Rabin’s critiques. Alternative perspectives of financial decision making, such as Prospect Theory, are developed, based on psychological research and evidence, and are used to underpin the concept of investor sentiment. Behavioural explanations for prominent asset pricing anomalies as explored, as well as frictions that promote market inefficiency, such as arbitrage constraints. The module also briefly covers applications of Behavioural theories to Corporate Finance decisions.
Learning Outcomes
- Apply the behavioural finance paradigm in particular cases.
- Critically evaluate the competing approach of behavioural finance.
- Understand and elucidate the relative strengths and weaknesses of the efficient markets hypothesis.
Assessment type
Summative
Description
Individual written report
Weighting
30%
Assessment type
Summative
Description
Formal Examination 1.5 hours
Weighting
70%