Behavioral Economics

Catalog description

The interface of psychology and economics has a long history. In the 19th century, classic economics texts by the likes of Adam Smith, Alfred Marshall, and Francis Edgeworth contained psychological insight and did not insist that individuals were always rational or self-interested. In the 20th century, however, psychology and economics took different paths as psychologists used experiments to chart how people think and behave while economists turned to highly simplified models of individual agents as building blocks for theories of markets and strategic behavior. One view is that psychology emulated biology, accumulating carefully documented facts, while economics aspired to be like a physics of social life. This course explores the modern attempt to draw the disciplines back together, which is most commonly termed ‘behavioral economics.’ This body of research incorporates psychological regularities into economics while being formal and predictive.