Behavioral Economics and Decision Making

Abstract:: Have you ever wondered if people are *really* rational? For the last hundred years economic theory has been built on the underlying assumption that people are rational. The field of behavioral economics and decision making both challenge this fundamental assumption by showing in a variety context, people's judgments are not rational. In this brief six week course, we will go through an overview of some of the main points in the field exploring things like prospect theory, the endowment effect, hyperbolic discounting, priming, moral decision making, nonconscious priming, among a variety of other topics.

Behavioral Economics and Finance, Spring 2004

Abstract:: Surveys research which incorporates psychological evidence into economics. Prospect theory. Biases in probabilistic judgment. Self-control and mental accounting with implications for consumption and savings. Fairness, altruism, and public goods contributions. Financial market anomalies and theories. Impact of markets, learning, and incentives. Some evidence on memory, attention, categorization, and the thinking process.

Abstract:: Integrates psychological insights into economic models of behavior. Discusses the limitations of standard economic models and surveys the ways in which psychological experiments have been used to learn about preferences, cognition, and behavior. Topics include trust, vengence, fairness, impatience, impulsivity, bounded rationality, learning, reinforcement, classical conditioning, loss-aversion, over-confidence, self-serving biases, cognitive dissonance, altruism, subjective well-being, and hedonic adaptation. Economic concepts such as equilibrium, rational choice, utility maximization, Bayesian beliefs, game theory, and behavior under uncertainty are discussed in light of these phenomena.