Behavioral Economics

(3 Credit Hours) · Undergraduate

This course systematically introduces the contents and methodology of behavior economics, its historical root and development history, and in particular its relationship with neoclassical economics. This course will discuss many laboratory experiments, field experiments and natural field data to shed light on how human behavior systematically deviates from rationality assumption in certain cases. The main topics include: social preferences, reference-deponent preferences, time inconsistency and self control problem, probabilistic judgment, overconfidence and limited strategic reasoning. Based on these evidence, we further analyze how to develop behavioral model based on neoclassical model to obtain a more accurate description of these behavioral traits. We then apply these models in various economic fields, including labor supply decision, consumption saving decision, choice under uncertainty and finance. Lastly, we will discuss policy advice from behavioral economics, which often features low cost, satisfactory performance and paternalism. HG 202320 Content: In this course, advanced topics in Behavioral Economics are discussed. The course considers mainly theoretical Behavioral Economics, not experiments, even though experimental evidence is introduced. Planned topics: 1. Introduction 2. Heuristics and Biases 3. Mental Accounting 4. Behavioral time discounting 5. Nudges 6. Happiness 7. Rank Dependent Utility 8. Prospect Theory 9. Other-regarding preferences 10. Learning Theories 11. Ambiguity Previous knowledge expected: Advanced Microeconomics Objectives: By the end of the course students should have an overview over the field of Behavioral Economics, be able to apply behavioral models to social and economic interactions, and understand the challenges and limitations of theoretical modeling of human behavior. Detailed Course Type: Lecture with Practical Class (Tutorial) Further Information and Recommended Reading: Dhami - The Foundations of Behavioral Economic Analysis Lecturer contact information: Dr. Peter Duersch; Email: duersch@xeeron.de IT - Trinity College - Dublin: The goal is to learn how to think about economic decision-making in a psychologically richer way while maintaining the rigor of economic analysis. You will learn (i) what are the basic psychological phenomena that are most important for economics; (ii) how to identify these phenomena from simple decisions and capture them in economic terms; and (iii) how they should change our understanding of basic economic questions.