Departing from theories assuming ‘homo oeconomicus’ agents, participants in this course learn about boundedly rational aspects of human behaviour. The latter play a key role in predicting and designing individual and strategic decisions as well as aggregate outcomes in markets and politics. The students learn to apply the insights generated by a boundedly rational approach to various fields in Public Economics and Managerial Economics, among others. The students learn to use experimental methods as well as statistics and econometrics to assess the validity of theoretical predictions of human behaviour. Participants will be prepared to assess scientific studies critically and to come up with problem statements and an adequate study design on their own.

First, an introduction to the methods of experimental economics as well as a review of basic statistics and econometrics analyses will be given. The course will then cover recent behavioural models of intertemporal decision-making, decisions under risk and uncertainty, as well as strategic and social decision-making. We will discuss recently developed models taking the boundedly rational nature of human decisions into account. The course uses theoretical reasoning, experimental data, and econometric analysis, which will guide the analysis of applied questions from diverse fields. The fields of application range from savings and retirement decisions, health insurance, taxation, labour market policies, incentives and promotion schemes in firms, public good provision, environmental issues, to charitable giving, and even more. An important part of the course will be devoted to discussions of policy implications, policy recommendations, and the need or curse of government intervention.

Advanced Microeconomics (EBC4232) or Theory of Individual and Strategic Decisions (EBC4197).