Psychological influences on investor behavior and market anomalies affecting financial decision-making outcomes.
About this course
Standard financial models assume that investors act rationally, but markets are driven by people. This course examines the psychological drivers that shape how individuals and groups make financial decisions. You will explore how cognitive biases, emotional responses, and social influences lead to predictable patterns in investor behaviour and create market anomalies.
You will move beyond traditional theory to look at real-world examples where human psychology impacted asset prices, corporate strategy, and market stability. The course covers topics such as herd behaviour, framing effects, and the impact of sentiment on trading volume. You will learn to identify these patterns and understand their implications for financial planning and market efficiency.
Who takes this course
This course is an elective for students in the Financial Planning program. It is also available as an elective for students in the Bachelor of Applied Business — Accounting program who wish to broaden their understanding of market dynamics beyond traditional quantitative methods.
Course details
| Detail | Information |
|---|---|
| Credits | 3.0 |
| Delivery | In-class lecture and discussion |
| Prerequisites | FINA 1960 Quantitative Methods for Finance, FINA 3440 Financial Statement Analysis |
Credits: 3 · Hours: 45
Prerequisites
Learning outcomes
- Explain how cognitive biases such as overconfidence and loss aversion affect investment choices.
- Analyze market anomalies and their relationship to collective investor psychology.
- Evaluate the limits of traditional efficient market theory in explaining price deviations.
- Apply behavioral frameworks to assess risk perception in personal and corporate finance.
- Design communication strategies that account for investor emotional responses.
Evaluation
| Component | Weight (%) |
| Case study analysis | 30 |
| Mid-term examination | 25 |
| Portfolio bias audit project | 25 |
| Final examination | 20 |