Behavioral Economics

Catalog description

The aim of the course is to identify behavioral patterns that cannot be easily explained with standard economic models. This is done in a constructive manner. That means students will test the predictions of standard economic theories based on observational data from laboratory experiments, field experiments, and naturally occurring phenomena and learn about alternative theories that fare better in describing the behavioral patterns that they identify. Equipped with this knowledge, students will learn how to use behavioral theories to design public policy interventions and perfect business processes. The course is divided into four main themes: individual decision making, fairness and social norms, strategic interactions, and applications. In the first part, students study the rationality of preferences, decision under uncertainty, and intertemporal choice. The second part reviews departures from self-regarding maximizing behavior and presents various models of other-regarding behavior that apply to settings where social norms and peer comparisons matter. In the third part, students tackle behavior in situations where strategic reasoning is central.