Psychology in Finance
Assessment Brief
Assessment Information
Discuss what the evidence suggests about the relationship between overconfidence and
trading activity.
Criteria for Assessment
• This assignment requires you to demonstrate your ability to distinguish between
different types of overconfidence and their effect on trading activities.
• Throw light on methodological and empirical controversies.
• Discuss what the evidence (using naturally occurring data, survey data, and
experimental data) suggests about the relationship between overconfidence and
trading activities.
• Discuss the psychological explanation for trading activity.
This assignment is designed to assess learning outcomes:
1. Understand and discuss the differences between rational economics theory in
decision making and the psychologically driven alternative approaches.
2. Understand and critically discuss the nature and role of cognitive and judgement
biases financial decision making.
3. Critically discuss the role of emotions and how these affect financial decision making.
4. Assess the role and effect of cultural factors and societal attitudes in financial
markets.
Word Count:
1,500
There will be a penalty of a deduction of 10% of the mark (after internal moderation) for
work exceeding the word limit by 10% or more.