Behavioural Choice and Financial Decision Making

Module description


Over the last thirty years, a wealth of empirical data has been accumulated which questions the ability of the rational choice model to predict behaviour, either in stylised laboratory settings, or in financial decisions taken by consumers in the real world. The purpose of this course is to introduce students to alternative models of choice, and to demonstrate the state of the art in terms of behavioural models of individual choice, with an emphasis on applications to financial decision-making.

Additional Information:


Knowledge of behavioural economics is not specific to any one country or culture.


All of the resources for this module are available on the ELE (Exeter learning Environment).


This module equips students with logical thinking, numeracy and writing skills, as well as an understanding and theoretical knowledge of economic issues. These help students think like economists, a quality highly valued by employers.

Full module specification

Module title:Behavioural Choice and Financial Decision Making
Module code:BEEM126
Module level:M
Academic year:2021/2
Module lecturers:
  • Dr Luke Lindsay - Convenor
Module credit:15
ECTS value:






Duration of module: Duration (weeks) - term 2:


Module aims

The aim of this module is to enable students to examine choice theory from a behavioural perspective, and highlight
instances where the rational choice model predicts actual choices correctly and instances where it does not.  Students will be introduced to known anomalies in choice behaviour relative to the rational choice model, and subsequent behavioural
theories which explain those anomalies.  A specific emphasis will be placed on financial markets and financial decision-making.

ILO: Module-specific skills

  • 1. synthesise and critically evaluate models of rational choice
  • 2. synthesise and critically evaluate with behavioural models which rationalize patterns of behaviour which are anomalous to the rational choice model
  • 3. synthesise applications of such models to finance

ILO: Discipline-specific skills

  • 4. synthesise the difference between normative and positive theories of behaviour
  • 5. critically evaluate how economic theories are developed and tested
  • 6. synthesise and critically evaluate how new theories are developed to account for new empirical evidence

ILO: Personal and key skills

  • 7. produce high quality work (whether in a group or individually) in written form
  • 8. engage in independent study
  • 9. research and summarise a body of literature in order to produce a report
  • 10. engage in critical thought and reasoned discussion

Learning activities and teaching methods (given in hours of study time)

Scheduled Learning and Teaching ActivitiesGuided independent studyPlacement / study abroad

Details of learning activities and teaching methods

CategoryHours of study timeDescription
Scheduled Learning and Teaching22Lectures/Seminars

Formative assessment

Form of assessmentSize of the assessment (eg length / duration)ILOs assessedFeedback method
Plan of presentationsApprox. 400 words (1 side of A4)1-10Written and verbal feedback

Summative assessment (% of credit)

CourseworkWritten examsPractical exams

Details of summative assessment

Form of assessment% of creditSize of the assessment (eg length / duration)ILOs assessedFeedback method
Paper presentation3030 minutes1-7Written/verbal
Assignment presentation7030 minute presentation.1-7Written/verbal

Details of re-assessment (where required by referral or deferral)

Original form of assessmentForm of re-assessmentILOs re-assessedTimescale for re-assessment
Presentation and AssignmentAssignment (4000 words)1-7July

Syllabus plan

  1. Bounded rationality
  2. Behavioural models of choice under risk and uncertainty
  3. Behavioural models of intertemporal choice
  4. Behaviour in financial markets

Indicative learning resources - Basic reading


This class will be based mainly on research papers which will be posted on the course’s ELE page or available through the library webpage.

The following books also provide a good background to the material discussed in class:

  • Shleifer, A. 2000. Inefficient Markets – An Introduction to Behavioural Finance, Oxford University Press. Shefrin, H. 2007. Behavioural Corporate Finance, McGraw-Hill.
  • Shefrin, H. 2007. Behavioural Corporate Finance, McGraw-Hill.
  • Thaler, R.H. 1991 Quasi Rational Economics, Russell Sage Foundation. Goldberg, J. and von Nitsch, R. 1999. Behavioural Finance, FinanzBuch Verlag. Shiller, R.J. 2000. Irrational Exuberance Princeton University Press.
  • Kahneman, D., Slovic, P. and Tversky, A. 1982. Judgement Under Uncertainty: Heuristics and Biases, Cambridge University Press.

Module has an active ELE page?


Origin date


Last revision date