Skip to main content

IB844 - Psychology of Investing & Financial Decisions

  • Module code: IB844
  • Module name: Psychology of Investing & Financial Decisions
  • Department: Warwick Business School
  • Credit: 10

Content and teaching | Assessment | Availability

Module content and teaching

Principal aims

"This module is designed to provide a very practical overview of an exciting and high profile new area in finance which takes as its premise that financial decision making and investor behaviour are not necessarily driven by “rational” considerations but by aspects of personal and market psychology. Behavioural finance recognises that our abilities to make complex investment and corporate decisions are limited, and that we can improve our performance both as financial managers and investors by recognising and dealing with the biases and errors of judgement to which all of us are prone. This module is deliberately conceptual, reflective and ideas based in nature and is designed to draw on your own experiences. There is no mathematical analysis involved.This course introduces students to the basic principles of behavioural finance and its practical implications for investors in international capital markets, analysts and other market participants, as well as for corporate financial managers. However the understanding of how we make decisions and how we can improve these by recognising the underlying psychological processes at work is likely to be of equal relevance in many other areas of business activity. "

Principal learning outcomes

Subject knowledge and understanding: Demonstrate a good knowledge of the basic building blocks of cognitive psychology and the role of the unconscious in investing and corporate financial decisions and their practical applications; Understand the differences between a behavioural finance perspective and a traditional finance perspective and the limitations of the traditional market efficiency paradigm. Demonstrate an understanding of some of the psychological drivers of market bubbles and the recent, and earlier, financial crises; Understand how, by appreciating the cognitive and emotional biases, people can become more successful investors and financial managers; Appraise critically some of the less well-founded claims made by financial institutions and purveyors of financial products and deal with these appropriately; Critically reflect on important developments in the new area of behavioural finance and the associated practical insights this provides.Key Skills:Demonstrate effective written and oral communication skills; Demonstrate effective team working skills; Demonstrate developed analytical skills. Cognitive Skills: Recognise their own decision errors and understand the reasons for these so future decision errors may be avoided; Understand why “real” people are “irrational” and what this means in the real world of business; Deal with the competing claims made by both conventional finance and behavioural finance proponents.

Timetabled teaching activities

"Total contact hours: 30; Lectures per week: 30; Module duration (weeks, if applicable): 5days Other: Intensive five days of teaching and collaborative group work"

Departmental link

https://my.wbs.ac.uk

Module assessment

Assessment group Assessment name Percentage
10 CATS (Module code: IB844-10)
A (Assessed work only) 3000 Word Essay 80%
  Group Presentation 20%

Module availability

This module is available on the following courses:

Core

N/A

Optional Core

N/A

Optional
  • Postgraduate Taught Business Administration (N1P2) - Year 10
  • Postgraduate Taught Business Administration (N1P2) - Year 2
  • Postgraduate Taught Business Administration (N1P2) - Year 3
  • Postgraduate Taught Business Administration (N1P2) - Year 4
  • Postgraduate Taught Business Administration (N1P2) - Year 5
  • Postgraduate Taught Business Administration (N1P2) - Year 6
  • Postgraduate Taught Business Administration (N1P2) - Year 7
  • Postgraduate Taught Business Administration (N1P2) - Year 8
  • Postgraduate Taught Business Administration (N1P2) - Year 9
  • Postgraduate Taught Business Administration (Executive) (N1P9) - Year 10
  • Postgraduate Taught Business Administration (Executive) (N1P9) - Year 2
  • Postgraduate Taught Business Administration (Executive) (N1P9) - Year 3
  • Postgraduate Taught Business Administration (Executive) (N1P9) - Year 4
  • Postgraduate Taught Business Administration (Executive) (N1P9) - Year 5
  • Postgraduate Taught Business Administration (Executive) (N1P9) - Year 6
  • Postgraduate Taught Business Administration (Executive) (N1P9) - Year 7
  • Postgraduate Taught Business Administration (Executive) (N1P9) - Year 8
  • Postgraduate Taught Business Administration (Executive) (N1P9) - Year 9
  • Postgraduate Taught Business Administration (Distance Learning) (N1PW) - Year 2
  • Postgraduate Taught Business Administration (Distance Learning) (N1PW) - Year 3
  • Postgraduate Taught Business Administration (Distance Learning) (N1PW) - Year 4
  • Postgraduate Taught Business Administration (Distance Learning) (N1PW) - Year 5
  • Postgraduate Taught Business Administration (Distance Learning) (N1PW) - Year 6
  • Postgraduate Business Administration (Executive) London (N1Q1) - Year 1
  • Postgraduate Business Administration (Executive) London (N1Q1) - Year 3
  • Postgraduate Taught Business Administration (Distance Learning) (N1Q2) - Year 2
  • Postgraduate Business Administration (Executive) London (N1Q4) - Year 1