Behavioral Economics ((4 Credits))

Catalog description

Behavioral economics studies the impact of social, cognitive and emotional factors on our economic decisions. Neoclassical economic analysis assumes that consumers, producers, borrowers and investors are selfish rational optimizing agents with well-defined preferences and perfect self-control. Research in psychology suggests that humans display irrational phenomena known as cognitive biases such as overconfidence, loss-aversion, altruism, mental accounting, endowment and status-quo bias.  Our choices are influenced by the environment, framing of alternatives, anchoring, trust, social norm of fairness and mistakes in probabilistic judgment. Implications for financial decision making, marketing and pricing strategies by firms, and the design of public policies will be discussed. The course satisfies economics skills in BME guidelines. Prerequisites: Microeconomics  ECON-2020.