Acquiring a structured insight into the important roles of psychological factors and processes in the judgments, decision-making and well-being of economic agents
Learning about the difference in approach between psychology and economics
Learning about the relations between psychology and economics

Increasingly, economists are discovering psychology as a means to enrich their models of economic behaviour and well-being and to give them a better foundation. The importance of this is illustrated by the fact that Nobel prize winner in economics in 2002 was the distinguished psychologist Daniel Kahneman. He characterizes his research as a quest for the ‘logic of the irrational’. Adam Smith already recognized that economic, just like other, behaviour is motivated by an intriguing blend of ‘rational’ considerations and ‘irrational’ sentiments. The great challenge is to investigate the implications of the latter motives for economics.
This course aims to give an intensive introduction into this field. In the first part of the course, the psychology and behavioural economics of judgment and decision-making are dealt with. Basic principles of rationality are compared with actual behaviour in making decisions. Also, a link is made to the emerging field of neuroeconomics. Next, in the second part of the course, students are introduced into the psychological and economic research on subjective well-being (happiness) and its psychological, demographic and socio-economic determinants (especially income). The importance of this research for economics and its policy implications will be highlighted. Differences and similarities in the approaches of psychology and economics will be clarified.

Hastie, Reid, and Robyn M. Dawes. Rational choice in an uncertain world: The psychology of judgment and decision making. Sage, 2010.
Articles and chapters from books.

Good understanding of microeconomics, probability theory and mathematics (level comparable to QM2) and basic understanding of macroeconomics.
An advanced level of English