Summerschool 2017: Behavioral and Experimental Economics

Course content

Behavioral economics attempts to make economics a more relevant and powerful science of human behavior by integrating insights from psychology and the social sciences into economics. Experimental economics adapts methods developed in the natural sciences to study economic behavior. Experiments are valuable in testing to what extent the integration of insights from other disciplines into economics is necessary and fruitful. Behavioral and Experimental Economics is a vibrant field of research in economics and sheds new light on many old and important issues in economics. The field has received wide recognition in recent years, for example by the award of the Nobel Prize in Economics 2002 to Daniel Kahneman and Vernon Smith. The field is rapidly growing. This course can therefore not provide a comprehensive overview but concentrates on selected topics instead.

The course addresses the following questions: What are the advantages and limitations of experimental economics? How important are deviations from the assumptions of full rationality and strict self-interest in determining outcomes of economic interaction? It is argued that identifying individual-level “anomalies” is not sufficient to demonstrate their economic and social importance. Instead, it must be analyzed how institutions mitigate and multiply these anomalies. A broad range of institutions, including markets, bargaining and voting is discussed. Successful completion of this course earns students 7.5 ECTS credits.

Education

BSc programme in Economics - recommended elective after the 2.year of the BSc

MSc programme in Economics – elective course

 

Learning outcome
  • Students learn how the toolbox of experimental economics can be used in research, and become critical consumers of the rapidly growing behavioral and experimental economics literature. More generally, the course contributes to a deeper understanding of the basic principles of rationality and self-interest in economics.
  • Students learn in what ways people systematically deviate from rational and self-interested behavior in individual decision making. This knowledge contributes to avoid pitfalls in decision-making.
  • Students learn in what ways markets and other forms of economic interaction can multiply or mitigate these errors. This knowledge is most relevant in the context of institutional choice or design (e.g. from an economic policy perspective).
  • Students participate in a series of demonstration experiments and therefore learn how experiments work in practice from the participants’ perspective.
  • Students write short papers to analyze experimental data and to reflect on the data and the experimental design. Students therefore improve their writing and reasoning skills.

 

The course has three elements:
- Lectures: Discussion of selected examples of research in behavioral and experimental economics. Explaining the relevance of demonstration experiments and how the data compares to findings in the literature.
- Demonstration experiments. Students participate in demonstration experiments in our experimental laboratory.
- Assignments: Students analyze the data from the demonstration experiment (i.e. their own behavior) and reflect on possible explanations for observed behavior. Detailed knowledge of the literature is not required at this stage. Assignments are group work (groups of 2 or 3). Assignments are graded as “pass” or “fail”. A student needs to earn 1 “pass” on assignments and is free to choose among the assignments. Deadlines are strict (see handout).

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

Schedule:
Week 1
July 24 Introduction
July 25 Experiments I (location: Øster Farimagsgade 5, room 05-0-34).
Hand in assignment 1 by July 28, 10h
July 26 Introduction
July 27 Markets
July 28 Experiments II
Hand in assignment 2 by August 2, 10h
Week 2
July 31 Loss aversion
August 1 Biases in probability judgments
August 2 Strategic complementarity and coordination
August 3 Money illusion
August 4 Experiments III
Hand in assignment 3 by August 9, 10h

Week 3
August 7 Money illusion / Fairness
August 8 Fairness / Voting
August 9 Voting
August 10 Public Goods
August 11 Public Goods / Q&A time

August 15 Exam


Timetable and venue:
To see the time and location of the lectures:

For week 30, 2017, please press the link under "Se skema" in the right side of the course description.

for week 31 and 32, 2017, please press the link
https:/​/​skema.ku.dk/​ku1718/​uk/​module.htm
Then
-Select Department: “2200-Økonomisk Institut” (and wait for respond)
-Select Module:: “2200-B5-5F17; [Name of course]”
-Select Report Type: “List – Week Days”
-Select Period: “Efterår/Autumn – Weeks 31-5”
Press: “ View Timetable”

ECTS
7,5 ECTS
Type of assessment
Written examination, 2 hours under invigilation
at the computers of the University.
The exam assignment is given in English and must be answered in English.
Aid
Without aids
Marking scale
7-point grading scale
Censorship form
External censorship
100 % censurship
Criteria for exam assessment

Students are assessed on the extent to which they master the learning outcome for the course.

Single subject courses (day)

  • Category
  • Hours
  • Lectures
  • 42
  • Practical exercises
  • 18
  • Preparation
  • 144
  • Exam
  • 2
  • English
  • 206