FIN 3617 Behavioural Finance
FIN 3617 Behavioural Finance
For a very long time, the field of finance has been dominated by a successful paradigm based on the notions that investors and managers are rational and that the market is efficient. In recent decades, however, anecdotal evidence as well as theoretical and empirical research has shown this paradigm to be insufficient to describe various features of actual financial markets. In this course, we explain financial market phenomena by incorporating institutional, social, cognitive, and emotional biases to the traditional paradigm. This broader perspective is called behavioural finance.
The objective of this course is to give students an understanding of investor and managerial behaviour and its impact on financial market outcomes. The participants should be able to identify most common obstacles to making rational decisions, to debias their own decisions, and to understand the risks and opportunities associated with biased decisions. The course spans all major fields of finance, including household finance, asset pricing, and corporate finance. It also relates to an emerging field of sustainable finance through the social preferences investors may have and how those affect investment decisions.
Students will acquire an understanding of the following topics:
- How do people make investment decisions?
- How does investor behaviour affect asset prices?
- How do firms respond to investor behavior?
- Recognize behavioral biases in decision making
- Identify implications for asset pricing
- Understand effects on corporate behaviour
- Clearly and effectively communicate advice based on the skills and knowledge learned
- The student develops a behavioural framework that can be applied across a variety of financial domains.
- How does behavioural finance differ from non-behavioural finance?
- How does behavioural finance help us to understand investor behaviour?
- What are the implications of investor behaviour for asset prices?
- How does investor behaviour influence corporate decision-making?
The course includes a combination of lectures and assignments.
Specific information regarding any aspect of the course or student evaluation will be provided in class. It is the student's responsibility to obtain any information provided in class that is not included on the course page (It's Learning) or in the reading materials.
Students will be expected to actively participate in all in-class discussions (related to assignments, course concepts, applications of behavioural finance in the industry, etc.).
Spreadsheets (Excel) may be used for certain practical applications and examples. Students should be familiar with their use.
This is a course with continuous assessment (several exam components) and one final exam code. Each exam component is graded by using points on a scale from 0-100. The components will be weighted together according to the information below in order to calculate the final letter grade for the examination code (course). Students who fail to participate in one/some/all exam elements will get a lower grade or may fail the course. You will find detailed information about the point system and the cut off points with reference to the letter grades when the course start.
At re-sit all exam components must, as a main rule, be retaken during next scheduled course.
Higher Education Entrance Qualification
Disclaimer
Deviations in teaching and exams may occur if external conditions or unforeseen events call for this.
SØK 3520 Microeconomics or EXC 3520 Microeconomics and BØK 3423 Finance, or equivalent.
| Assessments |
|---|
Exam category: Submission Form of assessment: Written submission Weight: 30 Grouping: Group (1 - 4) Duration: 3 Week(s) Comment: This component is a multimedia assignment. Exam code: FIN36171 Grading scale: Point scale leading to ECTS letter grade Resit: All components must, as a main rule, be retaken during next scheduled course |
Exam category: Submission Form of assessment: Written submission Invigilation Weight: 70 Grouping: Individual Support materials:
Duration: 3 Hour(s) Comment: This component consists of a number of hand-ins that are submitted throughout the semester. Exam code: FIN36171 Grading scale: Point scale leading to ECTS letter grade Resit: All components must, as a main rule, be retaken during next scheduled course |
| Activity | Duration | Comment |
|---|---|---|
Teaching | 42 Hour(s) | |
Prepare for teaching | 78 Hour(s) | |
Group work / Assignments | 40 Hour(s) | |
Student's own work with learning resources | 40 Hour(s) | Preparation for the final exam. |
A course of 1 ECTS credit corresponds to a workload of 26-30 hours. Therefore a course of 7,5 ECTS credit corresponds to a workload of at least 200 hours.