Behavioural Finance

The details
Essex Business School
Colchester Campus
Postgraduate: Level 7
Monday 13 January 2025
Friday 21 March 2025
15 July 2024


Requisites for this module



Key module for

MSC N30012 Finance,
MSC N39012 Investment and Wealth Management,
MSC N39024 Investment and Wealth Management

Module description

Behavioural finance has since the 1980s emerged as a new paradigm within finance. It rejects crucial tenets of mainstream finance such as the Efficient Market Hypothesis on the basis that agents are less than fully rational and that arbitrage fails to eliminate mispricing. It posits that people misapply Bayes’ law and deviate from the traditional expected utility framework.

In this module, we will discuss psychological concepts and ideas most relevant to financial applications while at the same time emphasising the deviations from rational beliefs and rational preferences, and show how allowing for common human traits such as overconfidence, loss aversion, conservatism, anchoring, framing, representativeness, emotions, etc., and for limits to arbitrage provide a better understanding of financial markets and financial puzzles. We will consider applications in the context of the aggregate stock market, the cross-section of average returns, investor trading behaviour, financing and investment decisions of firms, savings behaviour, and behavioural investing amongst others.

Module aims

The aims of this module are:

  • To provide alternative advanced theoretical models to neoclassical financial model that are based on the efficient market hypothesis.

  • To understand how key cognitive biases and limits to arbitrage are introduced in advanced behavioural models of investment behaviour and asset prices.

  • To examine the application of advanced concepts in behavioural finance to real world issues such as mergers and acquisitions and investment strategies.

  • To present some latest research relating to both the theoretical developments in the field of behavioural finance along with the related empirical evidence.

  • To build a bridge between academic research and investment practice.

Module learning outcomes

By the end of the module, students will be expected to be able to:

  1. Understand the implications of psychological biases and of limits to arbitrage for financial markets and asset prices.

  2. Understand the differences between behavioural and traditional explanations of anomalies in financial markets.

  3. Be familiar with the literatures in both empirical and theoretical developments of behavioural finance.

  4. Evaluate the theoretical and empirical evidence for behavioural models and hypotheses.

Module information

No additional information available.

Learning and teaching methods

This module will be delivered via:

  • One 2-hour lecture per week.


This module does not appear to have a published bibliography for this year.

Assessment items, weightings and deadlines

Coursework / exam Description Deadline Coursework weighting
Coursework   Take home assignment     100% 
Exam  Main exam: In-Person, Open Book, 120 minutes during Summer (Main Period) 
Exam  Reassessment Main exam: In-Person, Open Book, 120 minutes during September (Reassessment Period) 

Exam format definitions

  • Remote, open book: Your exam will take place remotely via an online learning platform. You may refer to any physical or electronic materials during the exam.
  • In-person, open book: Your exam will take place on campus under invigilation. You may refer to any physical materials such as paper study notes or a textbook during the exam. Electronic devices may not be used in the exam.
  • In-person, open book (restricted): The exam will take place on campus under invigilation. You may refer only to specific physical materials such as a named textbook during the exam. Permitted materials will be specified by your department. Electronic devices may not be used in the exam.
  • In-person, closed book: The exam will take place on campus under invigilation. You may not refer to any physical materials or electronic devices during the exam. There may be times when a paper dictionary, for example, may be permitted in an otherwise closed book exam. Any exceptions will be specified by your department.

Your department will provide further guidance before your exams.

Overall assessment

Coursework Exam
50% 50%


Coursework Exam
50% 50%
Module supervisor and teaching staff
Dr Vivek Nawosah, email:
Dr Vivek Nawosah and Dr Junyi Liao



External examiner

Dr Aris Kartsaklas
Brunel University London
Senior Lecturer
Available via Moodle
Of 24 hours, 22 (91.7%) hours available to students:
2 hours not recorded due to service coverage or fault;
0 hours not recorded due to opt-out by lecturer(s).


Further information
Essex Business School

* Please note: due to differing publication schedules, items marked with an asterisk (*) base their information upon the previous academic year.

Disclaimer: The University makes every effort to ensure that this information on its Module Directory is accurate and up-to-date. Exceptionally it can be necessary to make changes, for example to programmes, modules, facilities or fees. Examples of such reasons might include a change of law or regulatory requirements, industrial action, lack of demand, departure of key personnel, change in government policy, or withdrawal/reduction of funding. Changes to modules may for example consist of variations to the content and method of delivery or assessment of modules and other services, to discontinue modules and other services and to merge or combine modules. The University will endeavour to keep such changes to a minimum, and will also keep students informed appropriately by updating our programme specifications and module directory.

The full Procedures, Rules and Regulations of the University governing how it operates are set out in the Charter, Statutes and Ordinances and in the University Regulations, Policy and Procedures.