Foundations of Behavioural Economics

Course content

Why do people volunteer and donate to charitable causes? Why do we often eat unhealthy food, exercise too little, and struggle with completing important tasks in a timely manner? Why do most people think that they are better-than-average car drivers, entrepreneurs, lovers, ... ?  From the perspective of conventional economic theory, these questions are difficult to answer. Behavioral Economics is an attempt to shed light on these and other puzzling phenomena. By enriching the traditional economic model with an empirically more accurate foundation of human behavior, Behavioral Economics aims at improving the predictive power of economic models and the resulting policy recommendations.

 

In this course, we will discuss the psychological foundations of human behavior and their economic implications. The course builds on the introductory course “Psychology of Choice” and lays the foundations for subsequent field courses in which insights from behavioral economics are applied to different areas of economic research (e.g., Behavioral Finance, Science of Behavior Change, or Behavioral Public Economics).

 

In the course, we will present the empirical regularities that have inspired the development of Behavioral Economics, analyze the key theoretical models that have been brought forward, and discuss a number of applications where insights from Behavioral Economics have contributed to a better understanding of individual behavior and market outcomes.

 

The course will focus on the following topics:

  • Fairness and Social Preferences

  • Reference-Dependent Preferences and Loss Aversion

  • Present-Biased Preferences and Limited Self Control

  • Limited Cognitive Resources and Attention

  • Behavioral Economics, Market Interactions, and Economic Policy

Education

MSc programme in Economics – elective course

 

Learning outcome

After completing the course the student is expected to be able to:

 

Knowledge:

  • Define core concepts to model social preferences, reference-dependent preferences, limited attention, and present bias.
  • Account for the models’ central theoretical insights and implications.
  • Critically discuss theoretical models and empirical research results in behavioral economics.

 

Skills:

  • Critically assess theoretical and empirical studies at the intersection of economics and psychology.
  • Evaluate the results of these studies and identify limitations of the existing body of knowledge.
  • Critically reflect how economic theory, lab and field experiments, and other complementary empirical methods can be used to address research questions in behavioral economics.

 

Competencies:

  • Apply behavioral economic insights to theoretical problems and practical empirical questions.
  • Initiate and implement first own research studies on behavioral economic topics.

 

Lectures will supplemented with a number of guided practice sections. In the practice sections, we will discuss recap questions and homework assignments. Assignments will consist of theoretical exercises and empirical case studies through which the students can deepen and apply the knowledge acquired in the lecture.

Student participation and an active discussion is expected and encouraged.

Pandemic:
In case of a pandemic like Corona the teaching in this course may be changed to be taught either fully or partly online. For further information, see the course room on Absalon.

The course will be based on lecture notes and research papers, as well as selected handbook chapters and survey articles. A detailed syllabus with required readings will be provided in the beginning of the course.

The following survey articles provide an excellent introduction to the literature.

  • Rabin, M. (1999). Psychology and Economics. Journal of Economic Literature, 36: 11-46.

  • DellaVigna, S. (2009). Psychology and Economics: Evidence from the Field. Journal of Economic Literature, 47: 315-372.

A thorough knowledge of microeconomic theory (especially game theory and contract theory), microeconometrics and econometrics as in the bachelor programme of Economics are required.

In particular, it is strongly recommended that Microeconomics III has been followed prior taking "Foundations of Behavioural Economics".

It is recommended that Econometrics II has been followed prior or at least in parallel with "Foundations of Behavioural Economics".

Ideally, students should also have attended the interdisciplinary course on “The Psychology of Choice”.

Schedule:
2 hours lectures 1 to 2 times a week from week 6 to 20 (except holidays).

The overall schema for the Master can be seen at KUnet:
MSc in Economics => "courses and teaching" => "Planning and overview" => "Your timetable"
KA i Økonomi => "Kurser og undervisning" => "Planlægning og overblik" => "Dit skema"

Timetable and venue:
To see the time and location of lectures please press the link under "Timetable"/​"Se skema" at the right side of this page (F means Spring).

You can find the similar information in English at
https:/​/​skema.ku.dk/​ku2021/​uk/​module.htm
-Select Department: “2200-Økonomisk Institut” (and wait for respond)
-Select Module:: “2200-F21; [Name of course]”
-Select Report Type: “List – Weekdays”
-Select Period: “Forår/Spring – Week 5-30”
Press: “ View Timetable”

Oral
Individual
Collective

 

The lecturer gives continuos oral feedback during practice sections and in-class questions that are discussed with students in the lectures.

ECTS
7,5 ECTS
Type of assessment
Written examination, 3 hours under invigilation
in the exam venues of the university.

The exam assignment is given in English and must be answered in English.

Pandemic:
In case of a pandemic like Corona the date, time and type of exam as well as use of aids may be changed. Any further information will be announced here in the Exam section.
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Aid
Without aids

for the written exam.

 

In case of an oral reexam, please go to the section "Reexam" for further information about allowed aids.

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Marking scale
7-point grading scale
Censorship form
No external censorship
for the written exam. The exam may be chosen for external censorship by random check.
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Criteria for exam assessment

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

 

To receive the top grade, the student must with no or only a few minor weaknesses be able to demonstrate an excellent performance displaying a high level of command of all aspects of the relevant material and can make use of the knowledge, skills and competencies listed in the learning outcomes.

Single subject courses (day)

  • Category
  • Hours
  • Lectures
  • 42
  • Preparation
  • 161
  • Exam
  • 3
  • English
  • 206