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 | Available to all 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.
Outline Content
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 classes, 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.
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Entry Requirements (not applicable to Visiting Students)
| Pre-requisites |
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Co-requisites | |
| Prohibited Combinations | |
Other requirements | None |
Information for Visiting Students
| Pre-requisites | None |
| High Demand Course? |
Yes |
Course Delivery Information
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| Academic year 2024/25, 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
(
Lecture Hours 10,
Seminar/Tutorial Hours 4,
Programme Level Learning and Teaching Hours 2,
Directed Learning and Independent Learning Hours
84 )
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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 will be provided throughout the course.
Summative: Feedback will be provided on the assessment within agreed deadlines. |
| 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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Learning Resources
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.
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Additional Information
| Graduate Attributes and Skills |
Autonomy, Accountability and Working with Others
After completing this course, students should be able to:
Understand oneself and others, through critical reflection, diversity awareness and empathic development, in order to maximise individual and collective resilience, and personal and professional potential.
Knowledge and Understanding
After completing this course, students should be able to:
Demonstrate a thorough knowledge and understanding of contemporary organisational disciplines; comprehend the role of business within the contemporary world; and critically evaluate and synthesise primary
and secondary research and sources of evidence in order to make, and present, well informed and transparent organisation-related decisions, which have a positive global impact. |
| Keywords | Not entered |
Contacts
| Course organiser | Ms Yue Liu
Tel: (0131 6)50 4309
Email: Yue.Liu@ed.ac.uk |
Course secretary | Miss Lindsay Hunter
Tel: (0131 6)50 3823
Email: Lindsay.L.Hunter@ed.ac.uk |
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