Behavioral Economics

This course is available for both bachelor and master students.

Prerequisite for this course is a basic knowledge of microeconomics at the undergraduate level. More specifically, it is important that students have a good understanding of consumer demand. This can be achieved in the courses Microeconomics (course no. 9115501 / B540008101) or literature equivalent to: Perloff: Microeconomics. Pearson Addison Wesley, 7th edition or later.

Attention in behavioral economics has increased significantly in the last decades as a result of an increased effort in understanding and predicting human behavior and actions focusing both on the rational and human traits of persons’ behavior. In 2002, Daniel Kahneman and Vernon Smith, won the Nobel Prize in Economics for their contributions in the field of behavioral and experimental economics. Other recent Nobel Laureates researching within the field of behavioral economics include Alvin Roth (on market design) and Richard Thaler (on finance and mental accounting).

The purpose of the course is to introduce students to the vast field of behavioral economics. Behavioral Economics integrates economic theories and concepts with theories from the psychology literature, offering a unique vantage point to study human behavior. These theories and concepts are tested experimentally and theoretically.

The course will focus on individual’s quasi-rational behavior in decision making, by modifying the standard economic assumptions concerning rationality and decision making. Bounded rationality, limited willpower, and limited self-interest are three key areas in which human behavior and choices diverge from rational behavior in the economic sense. These are examples of core concepts that will be discussed during the course. The students in the course will be stimulated to think precisely (and often formally) about what is that specifically determines a given behavior or economic performance and how this could be tested. As a natural consequence, part of the work will be based on data and documentation such as results based on experiments and surveys.

In the course students will give presentations of both research papers and their own work. Students will work in small groups and be engaged in several inter and extra group activities. Finally, students will produce a term paper, where they will discuss and present their own project. The unique mix of in-class lectures and activities will provide students with knowledge on the topic, will teach them how to develop autonomously a research project, and will also help them to develop their presentation skills and teach them how to manage an audience competently.

• Describe concepts, theories, and methods in behavioral economics

Demonstrate skills in such a way that the students are able to:

• Select and apply relevant concepts, theories, and methods to specific behavioral problems
• Suggest and reflect critically on suggested solutions/initiatives to deal with specific behavioral problems

Demonstrate competencies in such a way that the students are able to:

• Apply and assess theories and methods in a reflected manner and based on sound conceptual underpinnings from behavioral economics
• Plan and perform analysis of selected behavioral case problems
• Critically address own and other research, constructively criticizing and providing solutions to the observed issues

A list of the material will be published on BlackBoard at the beginning of the course.

Example:

Published research papers, textbook such as Wilkonson and Klaes. An Introduction to Behavioral Economics. Palgrave MacMillan. Latest version.

1. Presentation of own assignment
2. Presentation of research papers
3. Compulsory attendance
4. Active participation at discussions and inter/extra group activities

Scheduled classes:

3 lectures weekly for 15 weeks.   

Workload: 

The students' total teaching load is expected to be divided as follows: