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Unit outline_

FINC3023: Behavioural Finance

Semester 2, 2024 [Normal day] - Camperdown/Darlington, Sydney

Behavioural Finance explores financial market 'anomalies' - factors that are not traditionally explained by efficient markets theory - such as why stock prices exhibit momentum and reversals, why large swings in stock prices occur over short time periods, and how individual investors differ from institutional investors.

Unit details and rules

Academic unit Finance
Credit points 6
Prerequisites
? 
FINC2012
Corequisites
? 
None
Prohibitions
? 
None
Assumed knowledge
? 

None

Available to study abroad and exchange students

Yes

Teaching staff

Coordinator Andre Lot, andre.lot@sydney.edu.au
Lecturer(s) Danielle Kent, danielle.kent@sydney.edu.au
Andre Lot, andre.lot@sydney.edu.au
The census date for this unit availability is 2 September 2024
Type Description Weight Due Length
Creative assessment / demonstration Interactive Oral Discussion
Individual interactive oral discussion based on group project.
40% Formal exam period 15 minutes
Outcomes assessed: LO1 LO2 LO3 LO4 LO5 LO6
Participation In-class financial experiments
Participation on financial experiments and simulations in-class.
10% Multiple weeks 10-40 minutes
Outcomes assessed: LO1 LO4 LO3 LO2
Small test In-class short early-feedback task
In-class computer-based short test on utility, loss and risk.
10% Week -03 40 minutes (including set-up time)
Outcomes assessed: LO1
Supervised test
? 
In-term exam
School exam covering part of the content taught.
40% Week 10
Due date: 12 Oct 2024 at 11:40
1.5 hours
Outcomes assessed: LO1 LO4 LO6 LO2

Assessment summary

  • Week 10 exam: the exam will cover part of the topics discussed in class, as announced on Canvas, comprimising writing sections, quantitative exercises and/or analysis of scenarios and cases. The exam will be organized in a computer lab and it is open-book, i.e. students are allowed to consult slides, lecture notes and other written materials as detailed on Canvas.
  • Interactive oral exam: delivery of the group project report on Nov 10th, 23:59, is a pre-condition for all members of each group to take part on the interactive oral session. The interactive oral sessions (15min per student) will be booked by students during normal exam period (Nov 11-14 and Nov 20-22). Each student will discuss the object of the group project (analysis of investment tool, app, advice package) and marked individually.
  • In-class short task: the early feedback task consists on a short in-class test to be taken on computers, covering utility, loss and risk preferences. The assessment of this short test is automated.
  • In-class financial experiments: students will participate on several financial experiments to be offered either during lectures or on tutorials. Marks will be given according to meaningful engagement and participation on the experimental tasks only. No previous preparation is required, and no marks will be given based on outcomes.

Detailed information for each assessment can be found on Canvas.

Assessment criteria

The University awards common result grades, set out in the Coursework Policy 2014 (Schedule 1).

As a general guide, a high distinction indicates work of an exceptional standard, a distinction a very high standard, a credit a good standard, and a pass an acceptable standard.

Result name

Mark range

Description

High distinction

85 - 100

Awarded when you demonstrate the learning outcomes for the unit at an exceptional standard, as defined by grade descriptors or exemplars outlined by your faculty or school. 

Distinction

75 - 84

Awarded when you demonstrate the learning outcomes for the unit at a very high standard, as defined by grade descriptors or exemplars outlined by your faculty or school.

Credit

65 - 74

Awarded when you demonstrate the learning outcomes for the unit at a good standard, as defined by grade descriptors or exemplars outlined by your faculty or school.

Pass

50 - 64

Awarded when you demonstrate the learning outcomes for the unit at an acceptable standard, as defined by grade descriptors or exemplars outlined by your faculty or school. 

Fail

0 - 49

When you don’t meet the learning outcomes of the unit to a satisfactory standard.

For more information see sydney.edu.au/students/guide-to-grades.

For more information see guide to grades.

Late submission

In accordance with University policy, these penalties apply when written work is submitted after 11:59pm on the due date:

  • Deduction of 5% of the maximum mark for each calendar day after the due date.
  • After ten calendar days late, a mark of zero will be awarded.

This unit has an exception to the standard University policy or supplementary information has been provided by the unit coordinator. This information is displayed below:

Due to the nature of the interactive oral assessment, late delivery requests of the group project report through simple extensions are not admissible. The group project report is the basis for the individual interactive oral exam for all members of each group, and all members of the group will not be allowed to participate in the interactive oral exam if the group project is not submitted on time. It is not possible to participate remotely or asynchronously on the in-class experiments.

Academic integrity

The Current Student website  provides information on academic integrity and the resources available to all students. The University expects students and staff to act ethically and honestly and will treat all allegations of academic integrity breaches seriously.  

We use similarity detection software to detect potential instances of plagiarism or other forms of academic integrity breach. If such matches indicate evidence of plagiarism or other forms of academic integrity breaches, your teacher is required to report your work for further investigation.

You may only use artificial intelligence and writing assistance tools in assessment tasks if you are permitted to by your unit coordinator, and if you do use them, you must also acknowledge this in your work, either in a footnote or an acknowledgement section.

Studiosity is permitted for postgraduate units unless otherwise indicated by the unit coordinator. The use of this service must be acknowledged in your submission.

Simple extensions

If you encounter a problem submitting your work on time, you may be able to apply for an extension of five calendar days through a simple extension.  The application process will be different depending on the type of assessment and extensions cannot be granted for some assessment types like exams.

Special consideration

If exceptional circumstances mean you can’t complete an assessment, you need consideration for a longer period of time, or if you have essential commitments which impact your performance in an assessment, you may be eligible for special consideration or special arrangements.

Special consideration applications will not be affected by a simple extension application.

Using AI responsibly

Co-created with students, AI in Education includes lots of helpful examples of how students use generative AI tools to support their learning. It explains how generative AI works, the different tools available and how to use them responsibly and productively.

Support for students

The Support for Students Policy 2023 reflects the University’s commitment to supporting students in their academic journey and making the University safe for students. It is important that you read and understand this policy so that you are familiar with the range of support services available to you and understand how to engage with them.

The University uses email as its primary source of communication with students who need support under the Support for Students Policy 2023. Make sure you check your University email regularly and respond to any communications received from the University.

Learning resources and detailed information about weekly assessment and learning activities can be accessed via Canvas. It is essential that you visit your unit of study Canvas site to ensure you are up to date with all of your tasks.

If you are having difficulties completing your studies, or are feeling unsure about your progress, we are here to help. You can access the support services offered by the University at any time:

Support and Services (including health and wellbeing services, financial support and learning support)
Course planning and administration
Meet with an Academic Adviser

WK Topic Learning activity Learning outcomes
Week 01 (1) Introduction to behavioural finance and to the psychology of finance; (2) Introduction to the fundamentals of expected utility, risk and loss aversion Lecture and tutorial (3 hr) LO1
Week 02 (1) Financial decision-making as it is actually done by professionals and non-professionals; (2) Using experiments to understand financial decision-making: Lecture and tutorial (3 hr) LO1 LO2 LO3
Week 03 (1) Financial advice, rules-of-thumb and behaviour; (2) Launch of group project Lecture and tutorial (3 hr) LO2 LO4 LO5
Week 04 (1) Disposition effect; (2) Overtrading and under-diversification Lecture and tutorial (3 hr) LO2 LO3 LO6
Week 05 (1) Financial crashes and asset bubbles; (2) Bank runs Lecture and tutorial (3 hr) LO3 LO4 LO6
Week 06 Trust and cooperation and financial decision-making [part 1] Lecture and tutorial (3 hr) LO6
Week 07 Trust and cooperation and financial decision-making [part 2] Lecture and tutorial (3 hr) LO6
Week 08 The science of well-being for finance Lecture and tutorial (3 hr) LO2 LO5
Week 09 Behavioural considerations on successful stakeholder engagement and corporate financial decisions Lecture and tutorial (3 hr) LO2 LO6
Week 10 Industry applications / guest lecture Lecture and tutorial (3 hr) LO2 LO4 LO5 LO6
Week 11 Nudges and decision architecture interventions by banks, fintechs and other financial institutions Lecture and tutorial (3 hr) LO2 LO3 LO4
Week 12 Framing, labels and mental accounts Lecture and tutorial (3 hr) LO1 LO2 LO3 LO5
Week 13 (1) Path dependency and dynamic inconsistency; (2) Myopic financial decision-making Lecture and tutorial (3 hr) LO2 LO3 LO5

Attendance and class requirements

Lecture recordings: Lectures will be recorded and made available asynchronously on Canvas for student use. Please note the Business School records lectures passively and cannot guarantee that the system will operate or that every lecture will be recorded. Students should ensure they attend and participate in-person in all classes. No replacement record will be provided by the lectures if technical issues prevent a given lecture from being recorded. Tutorials will not be recorded.

In-class experiments: in-class experiments count towards participation marks (10%) and can only be completed in class. In some weeks, they will be done on computer labs where teaching or tutorials will take place. In other weeks, students will use their internet connected laptops or tablets to complete the experiments. It is not possible to complete the experiments outside the physical classrooms, not complete them outside scheduled sessions.

Study commitment

Typically, there is a minimum expectation of 1.5-2 hours of student effort per week per credit point for units of study offered over a full semester. For a 6 credit point unit, this equates to roughly 120-150 hours of student effort in total.

Required readings

All readings for this unit can be accessed on the Library eReserve link available on Canvas.

  • Ackert, L and R. Deaves (2010) Behavioral Finance, Cengage Learning, Singapore.
  • Bachmman, K, T. Hens and E. Di Giorgi (20218). Behavioral Finance for Private Banking: From the Art of Advice to the Science of Advice. 2nd ed. Wiley.  
  • lecture notes and readers (posted on Canvas)

Learning outcomes are what students know, understand and are able to do on completion of a unit of study. They are aligned with the University's graduate qualities and are assessed as part of the curriculum.

At the completion of this unit, you should be able to:

  • LO1. Apply the basic framework of expected utility as the classical normative approach to model financial decision-making.
  • LO2. Consider the role of bounded rationality, limited attention and other phenomena that restricts, hinder or limit the ability of individuals to make efficient financial decisions, and how they adopt different heuristics and behaviours to make actual decisions or follow professional financial advice.
  • LO3. Identify and mitigate how errors in probability judgements can lead to suboptimal investment decisions and bad investment outcomes.
  • LO4. Explain how the limits of human cognition and the limits of arbitrage can combine together to produce excessive financial market volume and volatility along with bubbles and crashes (including media coverage, sentiment and other factors), and their effect on individual security prices.
  • LO5. Assess how rules-of-thumb or perceived wisdom of simple financial advice for lay persons might interact, reinforce or stave off effects that arise from individual biased beliefs or inconsistent preferences.
  • LO6. Integrate the role of social interactions and social preferences with financial decision-making in different domains.

Graduate qualities

The graduate qualities are the qualities and skills that all University of Sydney graduates must demonstrate on successful completion of an award course. As a future Sydney graduate, the set of qualities have been designed to equip you for the contemporary world.

GQ1 Depth of disciplinary expertise

Deep disciplinary expertise is the ability to integrate and rigorously apply knowledge, understanding and skills of a recognised discipline defined by scholarly activity, as well as familiarity with evolving practice of the discipline.

GQ2 Critical thinking and problem solving

Critical thinking and problem solving are the questioning of ideas, evidence and assumptions in order to propose and evaluate hypotheses or alternative arguments before formulating a conclusion or a solution to an identified problem.

GQ3 Oral and written communication

Effective communication, in both oral and written form, is the clear exchange of meaning in a manner that is appropriate to audience and context.

GQ4 Information and digital literacy

Information and digital literacy is the ability to locate, interpret, evaluate, manage, adapt, integrate, create and convey information using appropriate resources, tools and strategies.

GQ5 Inventiveness

Generating novel ideas and solutions.

GQ6 Cultural competence

Cultural Competence is the ability to actively, ethically, respectfully, and successfully engage across and between cultures. In the Australian context, this includes and celebrates Aboriginal and Torres Strait Islander cultures, knowledge systems, and a mature understanding of contemporary issues.

GQ7 Interdisciplinary effectiveness

Interdisciplinary effectiveness is the integration and synthesis of multiple viewpoints and practices, working effectively across disciplinary boundaries.

GQ8 Integrated professional, ethical, and personal identity

An integrated professional, ethical and personal identity is understanding the interaction between one’s personal and professional selves in an ethical context.

GQ9 Influence

Engaging others in a process, idea or vision.

Outcome map

Learning outcomes Graduate qualities
GQ1 GQ2 GQ3 GQ4 GQ5 GQ6 GQ7 GQ8 GQ9

This section outlines changes made to this unit following staff and student reviews.

Several topics covered in the unit were refreshed and changed. The assessment components are completely new, incorporating early feedback task, and the new interactive oral framework for examinations.

Disclaimer

The University reserves the right to amend units of study or no longer offer certain units, including where there are low enrolment numbers.

To help you understand common terms that we use at the University, we offer an online glossary.