London Business School is renowned for its finance department. Educating many of the City’s leading lights and boasting world-renowned faculty, the school’s finance courses are famed for their rigour and applicability. So you might imagine my surprise when our Organisational Behaviour professor managed to run an auction during class for a £20 note. Even I can value a £20 note – £20, surely? Well, in what was perhaps the best illustration of where financial theory ends and behavioural finance comes in, two highly intelligent, rational individuals in our class bid up the price to £31! Want to know how it happened?? Afraid you’ll have to sign up for the MBA to find out….

2 Responses to “£31 for a £20 note… going once, going twice… sold!!”

  1. funny and bizarre at the same time…I think the illustration perfectly explains the irrationalities in human bahaviour and is a simple model of a typical financial bubble scenario, boosted by irrational demand. Great post-thank you for sharing this.

  2. avatar Maria says:

    This is a test comment