Modules | Management School | University of Liverpool

ULMS Electronic Module Catalogue

The information contained in this module specification was correct at the time of publication but may be subject to change, either during the session because of unforeseen circumstances, or following review of the module at the end of the session. Queries about the module should be directed to the member of staff with responsibility for the module.

Title	Behavioural Economic Applications to Finance
Code	ECON321
Coordinator	Dr YY Oezcelik Economics Yigit.Oezcelik@liverpool.ac.uk
Year	CATS Level	Semester	CATS Value
Session 2025-26	Level 6 FHEQ	Second Semester	15

Pre-requisites before taking this module (other modules and/or general educational/academic requirements):

ECON112 STATISTICS FOR ECONOMICS AND BUSINESS 2022-23; ECON112 Statistics & Data Analysis for Economics and Business 2023-24

Modules for which this module is a pre-requisite:

Programme(s) (including Year of Study) to which this module is available on a required basis:

Programme(s) (including Year of Study) to which this module is available on an optional basis:

Teaching Schedule

	Lectures	Seminars	Tutorials	Lab Practicals	Fieldwork Placement	Other	TOTAL
Study Hours	24	6					30
Timetable (if known)
Private Study							120
TOTAL HOURS							150

Assessment
EXAM	Duration	Timing (Semester)	% of final mark	Resit/resubmission opportunity	Penalty for late submission	Notes
Assessment 1: Examination Assessment Type: Unseen Examination, Managed by SAS Duration: 2 hours Weighting: 70% Reassessment Opportunity: Yes Penalty for Late Submission: Standard UoL Penalty Appl	2		70
CONTINUOUS	Duration	Timing (Semester)	% of final mark	Resit/resubmission opportunity	Penalty for late submission	Notes
Assessment 2: Individual Report Assessment Type: Coursework Size: 1500 words Weighting: 30% Reassessment Opportunity: Yes Penalty for Late Submission: Standard UoL Penalty Applies Anonymous Asse	0		30

Aims

Provide students with knowledge and understanding of theoretical and empirical limitations of and challenges to the efficient markets hypothesis;
Present the psychological foundations of Behavioural Finance and how they impact upon investors’ rationality and arbitrage;
Provide the opportunity for students to critically evaluate behaviourally induced market puzzles;
Present key behavioural trading patterns from a theoretical perspective and outline their empirical design.

Learning Outcomes
(LO1) Students will be able to demonstrate a systematic understanding of the key concepts and issues in behavioural economic applications to finance.
(LO2) Students will be able to evaluate key theoretical and empirical literature in behavioural finance.
(LO3) Students will be able to show an ability to analyse main implications (theoretical and empirical) of behavioural finance findings.
(LO4) Students will be able to construct and present critical evaluations of key academic papers in behavioural finance.
(LO5) Students will be able to demonstrate skills of problem-solving and critical thinking in behavioural finance.
(S1) A Problem Solver
(S2) Numerate
(S3) Commercially Aware
(S4) An Excellent Communicator
(S5) IT Literate
(S6) Internationally Aware

Teaching and Learning Strategies

Teaching Method: Lecture
Scheduled Directed Student Hours: 24
Attendance Recorded: Yes

Teaching Method: Seminar
Scheduled Directed Student Hours: 6
Attendance Recorded: Yes

Self-Directed Learning Hours: 120
Description: Students will engage in wider reading to support the module and its assessments.

Skills Mapping

Skill 1: A Problem Solver
How is it developed: Students will be asked during the lectures, seminars the individual report and final exam to discuss intricacies between human psychology and its impact on financial decision-making and present potential solutions to issues that may arise.
Mode of assessment: Coursework and Examination

Skill 2: Numerate
How is it developed: Students will solve numerical problems, interpret statistical outputs and discuss models related to financial decision-making during lectures and seminars and discuss these in their individual reports and final exam.
Mode of assessment: Cours ework and Examination

Skill 3: Commercially Aware
How is it developed: The module will discuss the role of human psychology in financial decision-making in various business contexts and environments.
Mode of assessment: Coursework and Examination

Skill 4: An Excellent Communicator
How is it developed: In this module students will further develop their critical writing skills which is a key element of the individual report and final exam. Students will critically discuss sample reports by using the marking criteria. In lecture and seminar activities students will answer reflective questions and communicate these verbally.
Mode of assessment: Coursework and Examination

Skill 5: IT Literate
How is it developed: This skill is mainly developed via the individual report as the report (and any accompanying tables and diagrams) must be submitted processed in word format. Furthermore, students utilise an Audience Response System to answer to reflective que stions.
Mode of assessment: Coursework

Skill 6: Internationally Aware
How is it developed: An international perspective and examples will be provided throughout this module. Students will be introduced to a broad spectrum of examples, cases and discussions highlighting the truly international nature of financial markets and modern businesses.
Mode of assessment: Coursework and Examination

Syllabus

Efficient Market Hypothesis and its limitations;
Limits to Rationality 1: biases and heuristics;
Limits to Rationality 2: behavioural decision making;
Limits to Arbitrage - noisy markets and noise trader hypotheses;
Behavioural Puzzles: Theory and Empirical Evidence;
Overreaction, Underreaction and how to profit from them;
Feedback Trading: Theory and Empirical Identification;
Herd Behaviour: Theory and Empirical Identification;
Speculative Bubbles and Financial Crises;
Behavioural Finance and Financial Regulation;
Special topic: Provides for a current affairs topic (e.g. macro policy impact on financial markets.);

Recommended Texts
Reading lists are managed at readinglists.liverpool.ac.uk. Click here to access the reading lists for this module.