Behavioural Finance

Course Description
The main purpose of behavioural finance course is to provide a broad view of the behavioural
foundations and their applications to finance in regard to investors’ decisions, financial
markets, and corporate managerial behaviour, complementing the traditional paradigm.
1. Write one measurable learning objective for a lesson or module.
Develop a project evaluating institutional behavioural biases in Ethiopia at local or federal
level and describe how decision biases lead to their observed behaviour or anomaly,
including why market forces alone may not act to eliminate them.
2. Name the Bloom’s Revised Taxonomy level addressed in your objective.
 Creating: Designing a project work
 Apply: Discovering what is discussed in class in to a real situation
 Evaluate: Evaluation of institutional behavioural biases in Ethiopia
 Analysing: Contrast why market forces alone may not act to eliminate decision bias
 Remembering: Recalling procedures of decision bias identification learned during
class
 Describe:
3. Identify supporting learning materials (readings, videos, lectures).
A. Hand out
Chapter 1: Introduction to Behavioral finance
Historical development of Behavioral finance; Behavioral economics and
Finance; Traditional finance versus Behavioral finance perspectives
Chapter 2: Behavioral Finance: Theories and evidences
Assumptions of Behavioral finance theory; Understanding Investor
Behavior: Individual investor information selection and processing biases;
Theories of Behavioral finance; Prospect theory versus mainstream
expected utility theory; Market Psychology; How the Power of the Masses
Drives the Market and Herd Instinct: Page 22-35
Chapter 3: Financial Behavior and Choice with risk
Utility and search; Mental accounting and framing; Choice with risk and
Uncertainity; Independence and fanning out; Reference dependence and
prospect theory; Preference and loss aversion: Chapter 3: page 102-115
Chapter 4: Behavioral biases and corporate finance
Behavioral biases; Main behavioral factors that affect financial decisions;
Behavioral corporate finance; Established Behavioral Characteristics;
Psychological Traps Investors Should Avoid; Removing the Barriers to
Successful Investing: Chapter 4: Page 147-165
Chapter 5: Decision Theory Paradoxes and Decision errors
Behavioral decision-making in Finance; Decision Errors as the end result of
Cognitive and Emotional Biases; Decision Theory Paradoxes (The Allais
Paradox and The Ellsberg Paradox)
B. Lecture notes to be displayed in video including examples of Herding Behaviour, Mental
accounting, the Allais paradox, corporate finance in a nut shell, Decision theory paradox, and
the Ellsberg Paradox
C. Books: i. James Montier (2002), Behavioral Finance: Insight into Irrational minds and
Markets, Wiley Finance
ii. Lucy F. Ackert and Richard Deaves (2010) Behavioral finance: psychology,
decision-making, and markets, (South-Western Cengage Learning
4. Design or describe an assignment to measure achievement of your learning objective.
Project Work: In order to do a project, an individual student will select one of the following
perspectives: a financial sector operating in Ethiopia, a portfolio management team looking
for a new trading strategy, a consulting firm advising corporations on issues of financial
management; or an entrepreneurial start-up developing a retail financial product. The student
is supposed to write a project of not more than fifteen pages demonstrating important
procedures incorporating key components such as information selection, decision making and
risk minimization, decision bias, financial information system, behavioural anomaly, covered
in class and will present it through created link on the due date.

In summary, this project is intended as a venue for the students to apply the concepts and
methods covered in the class. The goal is to develop an implementable idea that has potential
to generate value in the context of decision making and creating resolution for biased
decision in a real case by using already given materials as a base.

Video assignment
Hello Students! My name is Abdissa Demise, your instructor for the course Calculus for
Economists (Econ2011) for this semester. I am from Ambo University, department of
Economics and serving since nine years. I have master degree in Development Economics
and currently following my PhD education in Financial Economics.

This video is planned to give you overview of the module Calculus for Economists (Econ
2011) course. In this short video, I introduce important contents of the course that we will
learn throughout this semester. The video gives you the general framework of the course
including major topics, sub-topics, mode of delivery and methods of assessment. The course
helps you to learn mathematical application in economic problem solution. Its implication
ranges from identification of mathematical equations to analysing economic problems. I hope
you will find the course wonderful.

The course starts from review of functions and concept of limit in relation to its application in
Economics. The next major topic is the concept of derivative in which we will cover rules of
derivative, firs order derivative, second order and higher order derivative with their respective
economic applications. The other sub-topic of this course is the concept of uni-variate and
multivariate calculus in which we discuss increasing and decreasing functions, curvature of a
function, linear and polynomial approximation, and economic application. Lastly, we will
cover the concept of integration, particularly, rules of integration, techniques of integration
and its application in consumer and producer surplus in welfare maximization in economics.
We will use videos not longer than 6 to 10 minutes to avoid confusion but in the left minutes,
we will totally discuss all of the issues.

In this course, we will follow lecturing, discussing, question and answer, and problem solving
approach. For each sub-topic, we solve all questions that will be displayed through video in
addition to giving class works for specific portions. During class discussion, video will give
you specific understanding on each problem. Hand outs and important reference books
related to each topic will be delivered to you to strength your knowledge. I will give you the
link for some solved questions that will help you understand all of the topics. Students can
ask their question at any time without fear if they face any confusion. The video will
incorporate related real world examples in addition to module based discussions. I will use
English language for my medium of instruction and for my explanations too. I will talk not
faster but considering the average of students’ understanding ability so that you will never
face challenge in my discussion.

The mode of assessment for this course will be by implemented through taking some quizzes,
tests, home take exams, assignments and final examination by using both face- to-face and
online platform according to the requirement. There will be two assignments i.e individual
and group assignment. In these assignments, students are expected to work hardly to grasp all
concepts of the course which will also help them for written exam. Here, I am happy to stay
with you and hope that you will succeed in this course as it is interesting. Thanks! Good Stay!
Lessons Learned Reflection

Part 1: Lessons Learned

1. 1. Understanding Pedagogy (Module 1)

From the pedagogy topic, I learned how to make active teaching from my side and
learning approach from the side of my students. It made me to change the way of
teaching I have been using so far to new approach which will create conducive
environment for my class in the future. Specifically, I understood that I have to
change my mode of teaching by involving students through asking brainstorming
questions on the beginning of my class, introducing the lesson and giving detail
discussion and finally summarizing the lesson for my students. I learned also that I
have to prepare assessments based only on the content of my lesson to achieve the
outlined objectives. In addition, this topic made me to give the feedback for my
students after I gave them an assignments and exams so that they will learn what they
missed. Thus, opportunity of taking this topic makes me to change my teaching
method in the future based on what I grasped from this specific topic.
2. 2. Designing Course Content (Module 4)
In designing course content, I learned that I have to focus on my set objectives. I
understood that I have to start from what I want to teach my students and what my
students should learn throughout duration of my lesson. I learned that I should
consider evidences I can provide to my students to make them deeply understand the
concept. I experienced from the topic that I have to provide supplementary materials
for my students in addition to hand out readings and videos. The topic made me to
change the way I have been preparing my course content to the way it is acceptable to
the objective of my module and suitable for my students in online platform education.
I committed to follow the tips I learned in this particular topic to make my work
succeed.

3. 2. Bloom's Taxonomy (Modules 2 and 4)

I leaned from the topic of Bloom’s Taxonomy that how to set learning objectives for
my both online and face-to face classes. Particularly, I learned to follow important
tips that make my objective measurable. I understood that measurability is important
here because it enables me to evaluate whether my objective is achieved or not. Now
onwards, while I set my learning objective, I decided to focus on how can I make my
students create new ideas or modify what they learned to real situation and prepare
objectives based on how I can upgrade evaluating ability of my students. I learned to
 develop an objective which makes my students differentiate contrasting concepts by
themselves and implement it in to tangible situations. In addition, I will include
objective that make my students explain what they learned and also memorize it when
they are asked.

4. Prompt 4 of 5. Reflect on what you learned in the Module 3 Student-to-Student

Interaction discussion.

I learned from student-to student interaction discussion that how to make video which
facilitates students’ communication with each other. The interaction discussion thought me
what I have to change in my future lesson than what I did in my previous classes. More
specifically, I learned how to increase their personal responsibility, quality of their
understanding to higher level and receiving valuable feedbacks from themselves as well as
from me to make them understand the concept clearly. I got also the ideas of Adobe Express
technology for online learning for my students as it has free access for collaboration in
presentations, graphics, info graphics, and other creative spaces by which students can share
and collaborate. Previously, I did not know this platform is suitable for a class but now I
learned it helps my students to interact with each other and hence I have to use it to facilitate
smooth interaction for my students to enable them share their experience. Hence, I will use
this technology for my classes in the near future when I want to teach my students in online
platform.

5. Prompt 5 of 5. Reflect on what you learned in the Problem-Solution discussion.

From the problem solution discussion, I learned how to select the discussion board
and look at whether topic of my interest has been raised by other colleagues and
addressed or not. So, I learned in the discussion that my issue has been answered by
other else, then I partially accepted and added extra question for my issue to get
additional explanation from my colleagues and posted in the comment box. I learned
that I got detailed explanation for my question. Additionally, I got the idea that if no
one has started my concern; I have to start the new thread on the add post to add an
informative topic and then I can add my question to the message and submit so that
my colleagues will clearly understand about my issue. As a result, I will get important
information from my colleagues regarding my questions. From this particular problem
solution discussion, I learned how colleagues support each other through online
platforms to solve problems in collaborative spirit. Therefore, this way helps me get
any question or ambiguity I face and also help my colleagues for their questions.

Action Plan Reflection

Prompt 1 of 4. What aspect of this training do you plan to implement immediately? (Consider
SMART goals, explained above, and write a SMART goal for yourself)

I will give an online tutorial on model exams from month of October to December for fourth
year Economics students of Ambo University to support them for their upcoming exit exam.

Prompt 2 of 4. What are the specific steps you will take to implement this plan?

In order to achieve my plan, I will develop videos discussing important problems by

collecting questions from previous models and exit exams. I will communicate with students
to adjust convenient time schedule without influencing their regular class. I will prepare and
attach short note consisting key concepts for students in the form of summary from courses
they will take an exit exam. I will initiate students not to miss each class by giving them
incentives such as solved problems to make them follow the tutorial properly and ask
questions by reading home take notes. I will ask them questions to answer and give feedback
with detail explanations for complex questions. Thus, students will build knowledge that
helps them to pass the exit exam.

Prompt 3 of 4. What is one long-term objective you will set for yourself to develop your skills in
online instruction? (Consider SMART goals, explained above, and write a SMART goal for yourself).
Make sure your long-term goal is clear and a path for implementation is achievable.

I will develop an online training video on statistical software for Ambo University economics
students until October 2025 GC to familiarize them with software application in filling their
knowledge gap for their thesis work on their graduation.

Prompt 4 of 4. How will you work toward this long-term goal?

Write a 4-7 sentence paragraph or a list describing your steps to achieve this goal. Make sure
the steps describe a longer-term implementation and outline a clear path to achieve the goal.

To achieve knowledge filling gap for Ambo University Economics students in regard to
software application, first I have to communicate with department of economics. Next, I will
develop video for training that consist basic software application. Specifically, I will focus on
economically applicable software, STATA and Eviews to make students apply them in their
own work. In doing so, I will show students how to input, save, edit and perform with data in
my video and give exercises for practice. I will provide experimental data to make students
regress, report the result, discuss, interpret and present it. Finally, I will ask each student to
demonstrate what they learned so that I can identify those students who have grasped the
knowledge and who are not.