Economic Psychology: Selected Topics

Introduction

Economic decisions are ubiquitous and interwoven into our everyday life and especially in the context of work. We can define an economic decision as any decision related to the expenditure and saving of time, money, and effort. In traditional economics it is assumed that people’s actions are fueled only by self-interest, that people make rational decisions which maximize their utility, and that context is hardly relevant. This economic thinking has affected organizational theory and research for decades.

However, research within economic psychology and behavioral economics paints a different picture. A large number of findings illustrates departures from the standard economic model, and together, these “anomalies” indicate that people are not best described as “homo economicus”. People give greater weight to losses than to gains, struggle with self-control, and care about fairness, not only about the economically rational choice. By taking psychological factors into account, economic psychology aims to describe, predict, and explain the actual economic behavior of individuals, and groups.

In this course we learn about the main topics and engage with central discussions in the field, following ‘Misbehaving: The making of behavioral economics’ by Richard Thaler. The course engages with current topics within economic psychology, especially the interaction between human psychology and digital tools, as well as sustainability. In addition to the book, a collection of articles will be provided before the semester start.

Course content

The course follows the outline of the book “Misbehaving” by Richard Thaler. From an introduction of the general field of economic psychology/behavioral economics, the course continues with sessions covering mental accounting, self-control, fairness perception, finance, and nudging. The course also uses contemporary articles to show how economic psychology can help to understand human-computer interaction, and decisions related to sustainability