Behavioral Economics ((3))

Catalog description

Behavioral economics is the study of human behavior that attempts to incorporate the insights of psychology and other social sciences into the development of economic models in an attempt to explain behavior that cannot be explained by standard economic analysis. We will discuss the basic neoclassical model and then demonstrate how recent findings in behavioral economics call into question some of the assumptions underlying the neoclassical model. We will then develop an alternative model (Prospect Theory) that can account for some of these decision making anomalies. Finally, we will discuss the empirical evidence for and against the findings of behavioral economists and any practical applications of those findings.