ECN421 Behavioral Economics
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. We will then discuss the market consequences and, importantly: how public policy may address market failures using insights from behavioral economics.
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
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.
Knowledge - upon completion of the course the student
- should have a solid background in the core theories and models of behavioral economics
- will have a comprehensive, up-to-date overview of research in behavioral economics
- will understand how behavioral economics can inform public policy
- should be familiar with different empirical methods that are suitable to test behavioral hypotheses
Skills - upon completion of the course the student
- should have the ability to analyze human behavior based on the insights of behavioral economics
- will be able to suggest interventions rooted in behavioral economics to address market failures
- can test and evaluate interventions using best practice in behavioral economics
General competence - upon completion of the course the student
- can communicate key insights of behavioral economics to both specialists and non-specialists
- can reflect upon and take ethical aspects into consideration when discussing topics in behavioral economics
Requirements for course approval
Students must hand in two problem sets in order to take the exam.
The final grade will be based on a assignment (30%) and a 3 hour written school exam (70%).
- Wilkinson and Klaes (2012), An Introduction to Behavioral Economics (2nd edition)
- DellaVigna (2009), Psychology and Economics: Evidence from the Field, Journal of Economic Literature
- Selected articles
- ECTS Credits
- Teaching language
Spring. Offered spring 2019.
Assistant professor Henning Hermes, Department of Economics