2022/23 Undergraduate Module Catalogue
LUBS3140 Behavioural Finance
10 creditsClass Size: 90
Module manager: Shima Amini
Taught: Semester 2 (Jan to Jun) View Timetable
Year running 2022/23
Pre-requisite qualificationsLUBS2205 Corporate Finance
LUBS2206 Corporate Financial Management
This module is mutually exclusive with
|LUBS2035||Finance for Small Business|
This module is not approved as a discovery module
ObjectivesOn completion of this module, students should be able to:
(1) Critique the rational perspective of modern finance theory.
(2) Identify the heuristics and biases that affect financial decisions.
(3) Explain how heuristics and biases influence investor behaviour and the functioning of the financial markets.
This module aims to provide students with an alternative view to the rational perspective of modern finance theory. Drawing on insights from psychology the module explores the psychological biases in financial decision making, and examines the impact of these biases on investor behaviour and asset pricing.
- Ability to critique rational perspective of modern finance theory.
- Ability to understand how heuristics and biases impact investor behaviour and financial markets.
- Ability to apply behavioural concepts to understand specific applications in financial markets.
Foundations and theoretical developments:
- Foundations of modern finance theory and efficient markets
- Limits to arbitrage
- Risk perception and investors preferences, axioms of rational choice and Expected Utility Theory
- Prospect theory, loss aversion and mental accounting
- Investor psychology: heuristics and biases
- Implications of heuristics and biases for financial decision making
Applications (selection of applications to be covered):
- Equity premium puzzle
- Excess volatility
- Momentum and herding
- Investor overconfidence
- Disposition effect and house money effect: prior outcomes
- Mental accounting
- Behavioural finance and retirement
|Delivery type||Number||Length hours||Student hours|
|Private study hours||78.50|
|Total Contact hours||21.50|
|Total hours (100hr per 10 credits)||100.00|
Private studyThis could include a variety of activities, such as reading, watching videos, question practice and exam preparation.
Opportunities for Formative FeedbackYour teaching methods could include a variety of delivery models, such as face-to-face teaching, live webinars, discussion boards and other interactive activities. There will be opportunities for formative feedback throughout the module.
Methods of assessment
|Exam type||Exam duration||% of formal assessment|
|Standard exam (closed essays, MCQs etc)||2 hr 00 mins||100.00|
|Total percentage (Assessment Exams)||100.00|
The resit for this module will be 100% by 2 hour examination.
Reading listThe reading list is available from the Library website
Last updated: 29/04/2022 15:28:07
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