Behavioural Finance (FIN362)

FIN362 Behavioural Finance is designed to provide students with a comprehensive understanding of the psychological and cognitive factors that influence financial decision-making. The course examines how biases, heuristics, emotions, and social influences shape investor behaviour, market dynamics, and financial outcomes. It explores the intersection of finance, psychology, and economics, emphasizing the role of behavioural insights in improving investment strategies, risk management, and corporate decision-making. By analysing real-world applications and case studies, students will develop a deeper appreciation of how human behaviour impacts financial markets and learn strategies to mitigate biases for more rational and effective financial decision-making.

• Introduction to modern finance and behavioural finance
• Expected Utility Theory and violation of Expected Utility Theory
• Prospect theory
• Mental accounting
• Heuristics and biases
• Overconfidence
• Non-standard belief and reference
• Behavioural corporate finance
• Behavioural explanations for anomalies
• Behavioural investing
• Implications for financial decision marking
• Behavioural research

• Distinguish behaviour finance from classical finance theories.
• Illustrate the principles of behavioural finance.
• Judge the types of behaviour biases from social scenarios.
• Appraise the impact of behavioural biases on financial decisions, market trends, and in-vestment strategies
• Analyse the biased behaviour to understand financial decision-making in investment, cor-porate finance, risk management and other social scenarios from behaviour perspective.
• Discuss and design strategies for mitigating biases.