Knowledge of:
Non-expected utility models of individual decision-making under risk and uncertainty, (e.g. heuristics in decision-making and prospect theory), models of inter-temporal choice,(e.g. hyperbolic and quasi-hyperbolic discounting), models of boundedly rational strategic behaviour (e.g. cognitive hierarchy/level-k and noisy equilibrium models), models of fairness and reciprocity, models incorporating norms and emotions, and formal models of dual-processes approaches to decision making.

The course will first demonstrate and discuss observed behavioural regularities in economic and social decision situations, i.e. that are inconsistent with predictions of homo economicus economics. Building on this base, it will cover the most important and recent developments in behavioural economics. Students will learn about the various relaxations of the traditional assumptions and how these change predictions of human decision-making. A core competence will be the ability to make a critical evaluation of traditional economic theory in the light of field and experimental empirical evidence. New theoretical models will be assessed and weaknesses and possibilities for improvements discussed.

There is no one textbook that will cover the course. The literature will consist of a wide variety of readings including chapters from textbooks aimed at advanced graduates and contemporary research articles.

Research masters students only: Microeconomics at a research Master’s level (e.g.: EBC4061 Microeconomics I and EBC4204 Microeconomics 2); exposure to experimental economics methodology (e.g. EBS4026 Experimental Economics Methods) is an advantage but not a formal requirement.