Academic year 2014-2015




Behavioral Economics

prof. alessandro innocenti
Department of Social, Political and Cognitive Sciences (DISPOC
University of Siena
+39 0577 233494




The course provides an introduction to behavioral economics, cognitive economics and behavioral finance. It has three main objectives. Firstly, to provide graduate students with an introduction to the use of experimental methods in economics and in social sciences. Secondly, to review the main evidence on violations of traditional economic assumptions that has been provided by recent research in behavioral and cognitive economics. Thirdly, to discuss economic and financial models that incorporates this new evidence, as well as its applications.


6 (40 hours)


A sound knowledge of microeconomics and game theory at an intermediate level is required (e.g. Kreps: Microeconomics for Manager, Gibbons: A Primer in Game Theory).


The course offers an introduction to behavioral economics. It will also give an overview of cognitive economics, neuroeconomics and behavioral finance.The course is also designed to familiarize students with the use of experiments to address research questions.

LECTURE INDEX (Lectures' content is detailed in the page Teaching Materials.)

Lecture 1 What is an experiment?

Lecture 2 Virtual worlds and experiments

Lecture 3 Experimental design

Lecture 4 What is behavioral economics?

Lecture 5 Cognitive economics and neuroeconomics

Lecture 6 Dual system

Lecture 7 The associative machine

Lecture 8 Wysiati and risk

Lecture 9 Heuristics and biases

Lecture 10 Prospect theory

Lecture 11 Mental accounting and choice

Lecture 12 Intertemporal Choice

Lecture 13 Preference Reversal

Lecture 14 Fairness

Lecture 15 Trust

Lecture 16 Emotions

Lectures 17-19 Applied behavioral finance

Lecture 20 Summary


The course is taught in English. The language of examination is English.


Midterm and final examination will be written essays in response to a series of questionsNo examination support material is allowed.

Class Preparation and Attendance

This course will consist of lectures, seminars and labs. A seminar is a collective endeavor in which all participants learn from each other. This means that much of class time will be spent discussing the readings assigned. The quality of the classroom sessions, then, depends on studentsí active participation. This will require to complete the assigned readings prior to class. Because class attendance and participation is crucial to this course, it will be considered in the final grade.

COURSE required textbook

Thinking, Fast and Slow by Daniel Kahneman, Farrar, Straus and Giroux, 2011, ISBN 978-0-374-27563-1


Behavioral Economics by Edward Cartwright, Routledge, 2011, ISBN 978-0-415-57312-2.

Nudge: Improving Decisions About Health, Wealth, and Happiness by Richard H. Thaler and Cass R. Sunstein, Penguin, 2009, ISBN 978-0-14-311526-7.

Predictably Irrational: The Hidden Forces That Shape Our Decisions by Dan Ariely, HarperPerennial, 2010, ISBN13 978-0-06-135324-6.

teaching material

The material of the course is covered in detail in the lecture notes that are downloadable with other material and suggested readings at the webpage Teaching Materials

Computer Lab

We will spend some class periods to see videos, websites, blog posts related to behavioral economics.


The course will meet three times a week.