Academic year 2014-2015
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.
TYPE OF EXAMS
Midterm and final examination will be written essays in response to a series of questions. No 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.
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
We will spend some class periods to see videos, websites, blog posts related to behavioral economics.
The course will meet three times a week.