Course overview
This course aims to provide students with insights into behavioural theories of finance, an understanding of classical versus behavioural theories of financial decision-making, and an extension of their knowledge of finance by demonstrating how “real” investors and markets do not always correspond to the “rational” agents and outcomes described under modern finance theory.
Course learning outcomes
- Identify and explain the behavioural biases, heuristics, and framing effects that present obstacles to maximising the value derived from corporate financial and investment decisions
- Assess how both individual financial decision-making and behaviour affect investment outcomes in financial markets
- Examine the relevant issues that arise in comparisons between efficient ('economically rational') markets and less understood but more realistic behavioural ('partially rational' or 'irrational') markets
- Demonstrate how educated investors and corporate decision makers can overcome these behavioural biases, heuristics, and framing effects to improve their corporate financial and investment decisions