Behavioral Economics

2025/2026

Учебный год

ENG

Обучение ведется на английском языке

3

Кредиты

Кто читает:

Департамент теоретической экономики

Статус:

Курс по выбору

Когда читается:

1-й курс, 3 модуль

Преподаватель

Саху Собхагья

Course Syllabus

Abstract

While traditional microeconomics assumes rationality in human behavior, reality often deviates from this assumption. Humans frequently demonstrate psychological biases in their economic choices. This advanced elective course aims to delve into these biases, offering a comprehensive exploration of contemporary behavioral models that explain this 'irrationality'. The focus is on applying these models to understand the economic decisions of individuals, particularly in developing countries. The course unfolds in three segments: first, it presents a broad spectrum of findings from behavioral economics to illustrate real-world economic decision-making; second, it equips students with theoretical frameworks and modeling techniques to analyze these biases; and third, it introduces the emerging domain of 'behavioral' development economics.

Learning Objectives

• Understand key concepts and theories in Behavioral Economics.
• Analyze how psychological factors impact economic decision-making.
• Apply Behavioral Economics theories to real-world economic problems.
• Develop critical thinking skills in the context of economic behavior.

Expected Learning Outcomes

• Understand the foundational principles and core questions of Behavioral Economics.
• Identify systematic inconsistencies in human decision-making that deviate from the rational choice model.
• Explain the concept of bounded rationality and its implications for economic behavior.
• Recognize common heuristics and cognitive biases that influence judgment and choice.
• Apply the concept of mental accounting to explain real-world financial decisions.
• Use Prospect Theory to analyze how people evaluate gains, losses, and risk.
• Explain how the availability and representativeness heuristics shape beliefs.
• Identify and critique logical errors such as the conjunction fallacy.
• Understand how the "law of small numbers" leads to misinterpretation of statistical evidence.
• Analyze behavioral patterns arising from the gambler’s fallacy and the hot-hand bias.
• Recognize how partition dependence affects probability judgments and decision-making.
• Compare and contrast Expected Utility Theory and Prospect Theory in modeling risky choices.
• Measure and interpret individual risk preferences using experimental and survey-based methods.
• Diagnose empirical puzzles that challenge the predictions of Expected Utility Theory.
• Apply the concept of expectations-based reference points.
• Evaluate how insights from Behavioral Economics inform policy design and interventions in developing economies.
• Differentiate between exponential, hyperbolic, and quasi-hyperbolic discounting models.
• Use time-inconsistency models to explain behaviors related to savings, health, and education.

Course Contents

• Introduction
• Role of context in choice
• Beliefs and Expectations
• Choice under Risk and Uncertainty
• Time Discounting and Social Preferences
• Applications to Development Economics

Assessment Elements

• Term-paper
  Conduct a comprehensive literature review on the application of a specific concept in behavioral economics over the past 15 years, with a focus on its relevance to development economics. Additionally, design a new research question addressing an underexplored aspect of your chosen concept in a development context.
• Final Examination

Interim Assessment

• 2025/2026 3rd module
  0.5 * Final Examination + 0.5 * Term-paper

Bibliography

Recommended Core Bibliography

• A course in behavioral economics, Angner, E., 2016
• An introduction to behavioral economics, Wilkinson, N., 2012
• Principles of behavioral economics : microeconomics and human behavior, Dhami, S., 2025
• Thinking, fast and slow, 499 p., Kahneman, D., 2013
• Wilkinson, N., & Klaes, M. (2012). An Introduction to Behavioral Economics (Vol. 2nd ed). Basingstoke: Palgrave Macmillan. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=1525059

Recommended Additional Bibliography

• Misbehaving. The making of behavioral economics, Thaler, R. H., 2015
• Nudge : improving decisions about health, wealth and happiness, Thaler, R. H., 2009

Authors

• Sakhu Sobkhagia