Course description

Behavioral Economics

Introduction

This course explores how formal models of behavioral economics can help us understand experimental data. The weight is on building intuitions rather than on developing technical skills. Students should be aware that this is a highly quantitative course.

Behavioral economics uses controlled experiments to document systematic deviations from the neo-classical theory built on pure self-regard and full rationality. Also, replicable deviations are used as input for new models capable of explaining observations better. The field covers a huge variety of substantial questions, pertaining to e.g. individual decision making, market interaction, social dilemmas, bargaining, auctions and voting.

Course content

  • What is behavioral economics?
    • The standard model in economics
    • Alternative assumptions
    • Lab -and field experiments as tools
  • Individual decision making
    • Values, attitudes, preferences
    • Risk and uncertainty
    • Inter-temporal choices
  • Strategic interaction
    • Bargaining
    • Public goods provision
    • Markets
    • Fairness and social preferences
    • Trust and emotions
    • Non-rational learning

Learning outcome knowledge

The aim of this course is to provide an understanding of three broad questions:

I. What is behavioral economics?

  • Which assumptions make economics behavioral?
  • What is the methodological approach that makes economics behavioral?

II. What are the core insights of behavioral economics?

  • With respect to individual choices?
  • With respect to strategic interaction in market situations as well as in non-market situations?

III. How can insights from behavioral economics facilitate private and public decision-making?

  • By making individuals aware of cognitive and emotional constraints on purposeful behavior?
  • By providing advice on how to structure decision-making processes in order to increase welfare?

Exam organisation

  • Written exam: 100%