Course notes on behavioural finance


Jason Collins


August 2, 2022


In this online book, I provide an introduction to behavioural finance, the study of how human decisions can drive market anomalies that would not be predicted by standard economic approaches to markets.

The book is based on part of a subject I teach in as part of UTS’s Graduate Certificate and Masters of Behavioural Economics. The subject is called Behavioural Economics and Corporate Decision Making, and this material comprises two weeks of the subject. I have separated it from the rest of the material (provided in another book) as it is better framed as a separate body of knowledge. This material is taught through a mix on online-self guided learning, online seminars and in-person weekend workshops.

The Graduate Certificate and Masters is for post-graduates with no assumed prior knowledge of economics or behavioural economics. The subject on which this book is based is taken after introductory economics and behavioural economics units.

This book covers the following areas:

  • Financial markets foundations: What are financial assets? What is the efficient markets hypothesis? How do we test the efficient markets hypothesis?
  • Behavioural finance: What are some observed challenges to the efficient markets hypothesis? What human behaviours could be driving these phenomena?