Behavioral Economics

Catalog description

This course introduces students to the field of behavioral economics, which seeks to combine standard economic thinking with more psychologically-plausible assumptions about human behavior. This is accomplished by making nonstandard assumptions about human preferences, exploring nonstandard beliefs, and emphasizing the limitations of our decision-making faculties. Predictions about individual behavior are more accurate and the policies of governments are more effective when these more-realistic models are effectively used. The topics covered include, but are not restricted to, choice under uncertainty, overconfidence and competitiveness, stereotypes and discrimination, moral and social norms, and procrastination and intertemporal choice. Each topic is approached by examining evidence that is not easily explained by the canonical economic model and then asking how and why it can be better explained by making specific deviations from the standard rationality assumptions. Specific policy interventions that can be used to help people make better decisions will also be discussed.