ECN421 Behavioral Economics

• Topics

  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.

• Learning outcome

  Knowledge

  Upon completion of the course, students can:

  • describe the core theories and models of behavioural economics
  • discuss research in behavioural economics
  • explain how behavioural economics can inform public policy

  Skills

  Upon completion of the course, students can:

  • apply different empirical methods that are suitable to test behaviooral hypotheses 
  • analyse human behaviour based on the insights of behavioural economics
  • suggest interventions rooted in behavioural economics to address market failures
  • test and evaluate interventions using best practice in behavioural economics

  General competence 

  Upon completion of the course, the student can:

  • communicate key insights of behavioural economics to both specialists and non-specialists
  • reflect upon and take ethical aspects into consideration when discussing topics in behavioural economics

• 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

  None.

• Assessment

  The final grade will be based on

  1. Home assignment (30%), written in groups or individually. Group size: 1-5 students. The assignment starts early/mid March and 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

  A-F

• 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