Behavioral Economics

ECN421 Behavioral Economics

Autumn 2024

  • Topics

    The objective of the course is to introduce students to the theoretical toolbox, and contemporary empirical research in behavioral economics. This will be done by using the standard economic model of choice as a benchmark and extend it with insights from psychological research. Following this approach will allow us to provide a better understanding of financial decision-making, labor market outcomes, and consumer behavior. These topics will frame our consideration of economic sustainability, specifically in our focus on discrimination and gender equity. We will then discuss the market consequences and, importantly: how public policy may address market failures using insights from behavioral economics. We will focus our applications on environmental sustainability and the role that behavioral economics can play in furthering sustainability efforts.

    We will cover the workhorse models of behavioral economics. A non-exhaustive list of topics include:

    • Time inconsistent preferences
    • Prospect theory
    • Biased beliefs
    • Social preferences
    • Limited attention
    • Behavioral Approaches to Public Policy

    In addition, we will discuss different empirical methods that are commonly used in the study of behavioral economics. Focus will be on the pros and cons of laboratory experiments, field experiments, and observational studies. During the course we will also reflect on ethical issues that arise in the application of behavioral economics.

    This course is approved as an ERS course (Ethics, Responsibility and Sustainability), and is one of the courses that master's students can choose to fulfill the requirement of one course (7,5 ECTS) in ERS.

  • Learning outcome


    Upon completion of the course, the student can…

    • describe the core theories and models of behavioral economics
    • discuss research in behavioral economics
    • explain how behavioral economics can inform public policy with specific applications to using behavioral economics to further sustainability
    • discuss economics approaches to discrimination and the way that behavioral economic insights can be used to understand discrimination
    • apply different empirical methods that are suitable to test behavioral hypotheses 
    • explain how behavioral economics can be used to motivate consumers to be more sustainable
    • consider the ethical issues that arise from economic interactions with less than fully rational agents and apply normative ethical frameworks to those issues


    Upon completion of the course, the student can…

    • analyze human behavior based on the insights of behavioral economics
    • suggest interventions rooted in behavioral economics to address market failures
    • test and evaluate interventions using best practice in behavioral economics
    • suggest interventions that helps each person and our society to be more sustainable  
    • assess the ethical implications of firm and government interventions on less than fully rational consumers and discuss these within ethical frameworks

    General competence 

    Upon completion of the course, the student can…

    • communicate key insights of behavioral economics to both specialists and non-specialists
    • reflect upon and take ethical aspects into consideration when discussing topics in behavioral economics
    • reflect on how behavioral economics interventions can be used to promote consumer welfare and sustainability, but also the potential for misuse

  • Teaching

    The main instruction format for the course is interactive plenary lectures by the professors. These feature Q&A, group discussion and group problem solving. In addition, the course teaching assistants will conduct lab discussions of problems.

  • Compulsory Activity


  • Assessment

    The final grade will be based on

    1. Home assignment (30%), written in groups or individually. Group size: 1-5 students. Students will have about 4 weeks to complete the assignment.
    2. An individual 4 hour home-exam (70%).

    Home assignment and home exam have to be written in English.

  • Grading Scale


  • Literature

    - Wilkinson and Klaes (2017), An Introduction to Behavioral Economics (3rd edition)

    - DellaVigna (2009), Psychology and Economics: Evidence from the Field, Journal of Economic Literature

    - Selected articles


ECTS Credits
Teaching language

Autumn and spring. Will be offered autumn 2024.

Course responsible

Assistant Professor Siri D. Isaksson, Department of Economics (main course responsible).

Associate Professor Samuel Hirshman, Department of Economics.