| Unit name | Behavioural Finance |
|---|---|
| Unit code | ACFIM0024 |
| Credit points | 20 |
| Level of study | M/7 |
| Teaching block(s) |
Teaching Block 2 (weeks 13 - 24) |
| Unit director | Dr. Sonny Biswas |
| Open unit status | Not open |
| Units you must take before you take this one (pre-requisite units) |
None |
| Units you must take alongside this one (co-requisite units) |
None |
| Units you may not take alongside this one |
None |
| School/department | School of Accounting and Finance - Business School |
| Faculty | Faculty of Social Sciences and Law |
Why is this unit important?
The neoclassical (or traditional) models in Finance are built on restrictive assumptions about rationality. These models are excellent benchmarks, and fare well empirically most of the time. However, there are specific circumstances under which the neoclassical models do not work very well. This is where Behavioural Finance steps in. Behavioural Finance extends the neoclassical models by using insights acquired in Psychology. The purpose of this unit is to provide an understanding of psychological biases which affect financial decision-making.
How does this unit fit into your programme of study?
The unit complements other units on the degree. You will be studying similar topics in this unit as in the other Finance units, but while other units explore these topics from a neoclassical perspective (rational agents), in this unit we will adopt a behavioural approach in which experimental/empirical evidence about human behaviour will be taken into consideration. Thus, this unit will give you a well-rounded understanding of these topics.
Overview of content:
We will begin with the concept of market efficiency -- we will go through empirical evidence in support of and against the efficient market hypothesis. Then, we will go through various models (e.g., prospect theory, ambiguity aversion, overconfidence) to reconcile the empirical evidence which appear puzzling in light of the traditional models. Finally, we will discuss some models in corporate finance to close the unit.
How will students, personally, be different as a result of the unit?
The unit discusses many circumstances when we do things that do not appear “rational”. How can this be explained? Can we incorporate these insights systematically into our decision-making to improve our day-to-day lives?
Learning Outcomes:
How you will learn
Teaching will be delivered through a combination of lectures, tutorials, drop-in advice and feedback sessions, and other online learning opportunities (e.g., recorded lectures). The main lectures will contain discussion of experimental evidence (including real-time play) to motivate the need for new models. We will introduce the models, and consider empirical evidence to assess their empirical success. These ideas will be enhanced through small class tutorials. A case study will help bridge the gap from the highly simplified models covered in lectures to the applications encountered in the real-world.
Tasks which help you learn and prepare you for summative tasks (formative):
Formative assessment will consist of nine tutorials, including one in which there will be a discussion of a case study. Feedback will be provided in each of these. The tutorials will consist of a set of discursive and numerical questions, with solutions provided during each class. Students will be encouraged to complete the tasks prior to the tutorial so that the tutorial itself can be feedback focused. The case study is intended to bridge the gap between the simplified models discussed in the lectures and a real-world application.
Tasks which count towards your unit mark (summative):
This unit will be assessed by 100% closed-book exam (2 hours). This assessment will cover ILO1, ILO2, ILO3 and ILO4.
When assessment does not go to plan
Any re-assessment required will be a like-for-like assessment (i.e., 100% exam).
If this unit has a Resource List, you will normally find a link to it in the Blackboard area for the unit. Sometimes there will be a separate link for each weekly topic.
If you are unable to access a list through Blackboard, you can also find it via the Resource Lists homepage. Search for the list by the unit name or code (e.g. ACFIM0024).
How much time the unit requires
Each credit equates to 10 hours of total student input. For example a 20 credit unit will take you 200 hours
of study to complete. Your total learning time is made up of contact time, directed learning tasks,
independent learning and assessment activity.
See the University Workload statement relating to this unit for more information.
Assessment
The assessment methods listed in this unit specification are designed to enable students to demonstrate the named learning outcomes (LOs). Where a disability prevents a student from undertaking a specific method of assessment, schools will make reasonable adjustments to support a student to demonstrate the LO by an alternative method or with additional resources.
The Board of Examiners will consider all cases where students have failed or not completed the assessments required for credit.
The Board considers each student's outcomes across all the units which contribute to each year's programme of study. For appropriate assessments, if you have self-certificated your absence, you will normally be required to complete it the next time it runs (for assessments at the end of TB1 and TB2 this is usually in the next re-assessment period).
The Board of Examiners will take into account any exceptional circumstances and operates
within the Regulations and Code of Practice for Taught Programmes.
