25770 Behavioural Finance6cp
Requisite(s): ((25742c Financial Management OR 25799c Financial Management) AND 25741c Capital Markets)
The lower case 'c' after the subject code indicates that the subject is a corequisite. See definitions for details.
These requisites may not apply to students in certain courses.
There are course requisites for this subject. See access conditions.
Anti-requisite(s): 25892 Behavioural Finance: Heuristics and Biases AND 25893 Behavioural Finance: Prospect Theory
This subject provides students with the theoretical knowledge and practical tools necessary to understand how financial decisions are made in a vast array of settings, incorporating insights from individual and social psychology in modern financial theory.
Students will learn to understand the most common “rules of thumb” in financial decision-making, identify potential biases and mistakes that can arise. The course focuses around three pillars:
- Individuals: how do we make saving and investing decisions? What biases can cloud our decisions? What mistakes are commonly made?
- Professionals: do advisors/managers exhibit similar biases? How do advisors/managers behave if markets are not efficient?
- Financial Markets: are markets fully efficient? Are stock returns predictable?
The subject is based on a hands-on approach whereby students will develop and reinforce a set of analytical tools related to financial advice and investment decisions. We'll also consider how behavioural principles can help develop new financial services and products for consumers.
Detailed subject description.