Preliminary knowledge

A thorough knowledge of microeconomic theory (especially game theory and contract theory) and microeconometrics are required. Ideally, students should also have basic knowledge of experimental methods in economics.

Abstract

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. “Economics and Psychology” (aka “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. 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.

Contents

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 and Public Policy

Literature

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 a valuable 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.

Teaching concept

Lectures will supplemented with a number of guided practice sections (corresponding to roughly 3 SWS of lectures and 1 SWS of practice sessions). 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.

Die Veranstaltung entspricht einem Vorlesungsanteil von 2 SWS und einem Übungsanteil von 2 SWS.

Participants

• BWL-EaF-Ma-2015 > Wahlpflichtbereich > (1st-3rd Semester, Elective) Modul "Economics and Psychology "
• GOEMIK-Ma-2016 > Wahlpflichtbereich > Bereich Volkswirtschaftslehre > (1st-3rd Semester, Elective) Modul "Economics and Psychology "
• MuU-Ma-2013 > Wahlpflichtbereich II > Wahlpflichtbereich II B.: Märkte und Unternehmen aus Marktperspektive > (1st-3rd Semester, Elective) Modul "Economics and Psychology "
• VWL-Ma-2009-V2013 > Wahlpflichtbereich I > (1st-3rd Semester, Elective) Modul "Economics and Psychology "
• WiMathe-Ma-2013 > VWL-M I > (1st-3rd Semester, Elective) Modul "Economics and Psychology "