The objective of the course is to introduce students to the theoretical toolbox, and contemporary empirical research in behavioural 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, labour market outcomes, and consumer behaviour. We will then discuss the market consequences and, importantly: how public policy may address market failures using insights from behavioural economics.
We will cover the workhorse models of behavioural economics. A non-exhaustive list of topics include:
- Time inconsistent preferences
- Prospect theory
- Biased beliefs
- Social preferences
- Limited attention
In addition, we will discuss different empirical methods that are commonly used in the study of behavioural 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 behavioural economics.