Foundations of Behavioural Economics
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
After completing the course the student is expected to be able to:
- 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.
- 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.
- 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.
Restrictions due to pandemic crisis:
The teaching in this course may be changed to either fully or partly online due to a pandemic crisis like COVID-19.
Further information and in case of changes: Please read the study messages in KUnet or the announcements in the virtual course room on Absalon (for enrolled students).
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 courses Microeconomics I, Microeconomics II and Econometrics
I i 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”.
3 hours lectures a week from week 36 to 50 (except week 42).
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 (E means Autumn).
You can find the similar information partly in English at
-Select Department: “2200-Økonomisk Institut” (and wait for respond)
-Select Module:: “2200-E22; [Name of course]”
-Select Report Type: “List – Weekdays”
-Select Period: “Efterår/Autumn”
Press: “ View Timetable”
Please be aware:
- The schedule of the lectures can change without the participants´ acceptance. If this happens, you can see the new schedule in your personal timetable at KUnet, in the app myUCPH and through the links in the right side of this course description and the link above.
- It is the students´s own responsibility continuously throughout the study to stay informed about their study, their teaching, their schedule, their exams etc. through the curriculum of the study programme, the study pages at KUnet, student messages, the course description, the Digital Exam portal, Absalon, the personal schema at KUnet and myUCPH app etc.
The lecturer gives continuos oral feedback during practice sections and in-class questions that are discussed with students in the lectures.
- 7,5 ECTS
- Type of assessment
Written examination, 3 hours under invigilation
- Type of assessment details
- ITX-exam in the exam venues of the university.
The exam assignment is in English and must be answered in English.
Changes to the exam due to a pandemic crisis:
In the event that restrictions from a pandemic crisis may affect the conduction of the ITX-exams, the written exam and the re-sit exam will change to a written 3 hours take-home exam. The changes will be announced in study messages at KUnet and in Digital Exam.
The take-home exams will still be individual and it is not allowed to communicate with any one about the exam assignment nor the solution at all. It is also prohibited to distribute data and other information at all. If this or alike actions happens, it will be regarded as cheating and plagiarism.
No aids allowed at the written ITX-exam.
For further information about allowed aids for the re-examination. Please go to the section "Re-exam".
If the ITX-exam changes to a take-home exam due to a pandemic crisis, the written take-home exam is with all aids.
- Marking scale
- 7-point grading scale
- Censorship form
- No external censorship
at the written exam. The written ITX-exam may be chosen for external assessment by random sample.
An oral re-examination may be with external assessment.
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 "12", 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.
In order to obtain the passing grade “02”, the student must in a satisfactory way be able to demonstrate a minimal acceptable level of the knowledge, skills and competencies listed in the learning outcomes.
Single subject courses (day)
- Course number
- 7,5 ECTS
- Programme level
- Full Degree Master
- Go to 'Signup' for information about registration and enrollment.
Information about admission and tuition fee: Master and Exchange Programme, credit students and guest students (Open University)
- For teaching: Go to 'Remarks'.
- For exam and re-sits: Go to 'Exam'.
- Department of Economics, Study Council
- Department of Economics
- Faculty of Social Sciences
- Carsten Søren Nielsen (15-4f6d7e7f80717a3a5a7571787f717a4c716f7b7a3a77813a7077)
See "Course Coordinators"
Please read "Remarks" regarding the schedule of the teaching.
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