Postgraduate Course: Behavioural Finance (CMSE11408)
Course Outline
School | Business School |
College | College of Arts, Humanities and Social Sciences |
Credit level (Normal year taken) | SCQF Level 11 (Postgraduate) |
Availability | Not available to visiting students |
SCQF Credits | 10 |
ECTS Credits | 5 |
Summary | This course is designed to provide an overview of an exciting new and fast growing area in finance, which takes as its premise that investment decision-making and investor behaviour are not necessarily driven by 'rational' considerations but by aspects of personal and market psychology. Behavioural finance recognises that our abilities to make complex financial decisions are limited due to the biases and errors of judgement to which all of us are prone. This course introduces cognitive biases, discusses the impact of such biases on the financial decision-making, and explores the behaviour of individual investors, fund managers and corporate managers. |
Course description |
This course is intended to complement other finance courses that are mainly based on the traditional paradigm which assumes that investors and managers are generally rational. Specifically, this course has two main objectives. First, we aim to examine how the insights of behavioural finance theories shed light on the behaviour of individual investors and finance professionals in investment decision-making and corporate financial decision-making. Second, we explore the possibility to improve investment performance and corporate performance by recognising the cognitive biases and applying appropriate 'debiasing' techniques.
Topics covered in this course include cognitive biases and heuristics, prospect theory, mental accounting, social interaction, and emotions and investment decisions.
Student Learning Experience:
The learning occurs primarily through reading and thinking about the papers or chapters of books recommended and discussion in class. This reading is supported by the programme of ten lectures and nine tutorials, in each of which an overview of the topic is presented and the findings of a number of relevant papers are reviewed in some detail.
Learning takes place in three stages. Prior to each session you are required to complete the reading assignments given. During the session, the lecture slides will be used to focus the discussion and to help to summarise key issues. As the structure of the elective is designed to be cumulative, you will be expected to bring your learning and insights from previous sessions to bear on subsequent sessions.
Tutorial/seminar hours represent the minimum total live hours - online or in-person - a student can expect to receive on this course. These hours may be delivered in tutorial/seminar, lecture, workshop or other interactive whole class or small group format. These live hours may be supplemented by pre-recorded lecture material for students to engage with asynchronously.
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Entry Requirements (not applicable to Visiting Students)
Pre-requisites |
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Co-requisites | |
Prohibited Combinations | |
Other requirements | For MSc Accounting & Finance, Msc Finance, MSc Finance, Technology and Policy students, or by permission of course organiser. Please contact the course secretary. |
Course Delivery Information
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Academic year 2021/22, Not available to visiting students (SS1)
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Quota: None |
Course Start |
Block 3 (Sem 2) |
Timetable |
Timetable |
Learning and Teaching activities (Further Info) |
Total Hours:
100
(
Seminar/Tutorial Hours 10,
Programme Level Learning and Teaching Hours 2,
Directed Learning and Independent Learning Hours
88 )
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Additional Information (Learning and Teaching) |
Seminar/Tutorial hrs are the min total live hrs, online or in-person, students can expect to receive
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Assessment (Further Info) |
Written Exam
0 %,
Coursework
100 %,
Practical Exam
0 %
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Additional Information (Assessment) |
100% coursework (individual) - assesses all course Learning Outcomes |
Feedback |
Formative feedback:
Students are strongly encouraged to obtain formative feedback by asking/answering questions.
Summative feedback:
Generic feedback on students¿ performance on coursework. |
No Exam Information |
Learning Outcomes
On completion of this course, the student will be able to:
- Understand and critically discuss the differences between a behavioural finance perspective and a traditional finance perspective.
- Understand and critically discuss the cognitive biases and errors of judgment that affect investment and financial decisions.
- Critically evaluate behavioural influences involving investment and financial decisions.
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Reading List
Required:
Nofsinger, J. (2014), The Psychology of Investing, 5th edition (international edition), Pearson, ISBN: 0133382877.
Shefrin, H. (2007), Behavioral Corporate Finance, 1st edition, McGraw-Hill, ISBN: 0072848650.
Recommended:
Forbes, W. (2009), Behavioural Finance, 1st edition, John Wiley, ISBN: 9780470028049.
Ackert, L. and Deaves, R. (2010), Behavioral Finance: Psychology, Decision-Making, and Markets, 1st edition, South-Western, ISBN: 0538752866.
Baker, K. and Nofsinger, J. (2010), Behavioral Finance: Investors, Corporations, and Markets, John Wiley, ISBN: 9780470499115.
Montier, J. (2010), Behavioural Finance, John Wiley, ISBN: 9780470844876.
Resource List:
https://eu01.alma.exlibrisgroup.com/leganto/public/44UOE_INST/lists/26180533000002466?auth=SAML |
Additional Information
Graduate Attributes and Skills |
Intellectual Skills and personal development
On completion of the module, students should:
- Have developed a critical understanding of the main principles of cognitive psychology as applied in behavioural finance;
- Have developed their ability to understand complex lines of argument and reasoning in behavioural finance.
Subject Specific Skills
Students will be familiarised with the latest developments and issues in behavioural finance and understand their implications for securities pricing, financial analysis, and corporate finance decision-making.
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Keywords | Not entered |
Contacts
Course organiser | Ms Yue Liu
Tel: (0131 6)50 4309
Email: Yue.Liu@ed.ac.uk |
Course secretary | Miss Charlotte Brady
Tel: (0131 6)50 8074
Email: C.Brady@ed.ac.uk |
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