Behavioural Economics (2225.YR.014060.2)

General information

Type:	OPT	Curs:	1,2,3,4	Period:	S semester
ECTS Credits:	3 ECTS

Teaching Staff:

Group	Teacher	Department	Language
Year 1	Daniel Sanchez Moscona	Economía, Finanzas y Contabilidad	ENG

Group	Teacher	Department	Language
Year 2	Daniel Sanchez Moscona	Economía, Finanzas y Contabilidad	ENG

Group	Teacher	Department	Language
Year 3	Daniel Sanchez Moscona	Economía, Finanzas y Contabilidad	ENG

Group	Teacher	Department	Language
Year 4	Daniel Sanchez Moscona	Economía, Finanzas y Contabilidad	ENG

None.

Knowledge about basic microeconomic concepts such as supply and demand functions, market equilibrium, and elasticities is assumed. Students are expected to understand the basic rules of probability as well as to have a basic knowledge of statistical concepts such as random sampling, confidence intervals, hypothesis testing, correlation and linear regression. They should also be able to follow basic algebraic arguments and knowledge of the elementary rules of differential calculus is recommendable.

50% in class
50% independent individual/group work

Just recently, in 2017, Professor Richard H. Thaler (University of Chicago), a behavioural economist, was awarded the Nobel Prize in Economics. This represented the culmination of a revolution in Economics, in which insights from Psychology were used to greatly enrich classical economic models. This has implied a whole rethinking of the standard rationality assumptions in economics that has allowed the discipline to move in an innovative and exciting direction.
Simultaneously, firms and public institutions noticed the great impact that a better understanding of human attitudes and motivations could have on the quality of their decisions. Thus, currently it is not uncommon to see giant firms like Google or Facebook perform thousands of experiments to establish causal relationships behind economic phenomena.
In this course you will learn the main findings of behavioural economics in topics including choice under uncertainty, other regarding preferences, time discounting, game theory, learning or bounded rationality. You will not only learn how these findings came to be but also how to design, conduct and analyse your own experiments so that organizations can benefit from your knowledge and achieve better decision making based on causal evidence. Additionally, through participating in class experiments, you may also learn more about yourself that you are currently prepared to know!

By the end of the course, students are expected to be able to:

- Understand the behavioural assumptions made in classical economic models and the influence of psychology in shaping the way modern economics models human behaviour.
- Design incentive schemes that are consistent with the behavioural traits documented in the existing literature.
- Interpret academic articles on behavioural and experimental economics and assess them in terms of their methodological validity.
- Understand the concept of causality and the power of experiments in establishing causal relations.
- Design economic experiments and appropriately interpret their results.
- Think about applications of experimental and behavioural economics in business environments and public policy.

1. Introduction to Behavioral and Experimental Economics Introduction and logistics. What is Behavioural Economics? How did the discipline come about? Economics meets Psychology. Experiments: Explaining causal relationships. Anatomy of an experiment. Challenges of design and implementation. Application to real-life situations.

2. Enriching the Homo Economicus: Adding behavioural traits to economic models. Cognitive biases and heuristics. Risk aversion and intertemporal decisions: A behavioural approach. Other-regarding preferences.

3. Policy and business applications of Behavioural Economics Behavioral economics and public policy. Case study: Behavioral Insights Team. Behavioral economics in technological firms. Other applications of behavioural economics: sports, etc.

- Lectures
- Assignments
- Experimental project

ASSESSMENT BREAKDOWN

The main reference texts for this course are:
- Thaler, Richard H.,Sunstein, Cass R. (2008) Nudge: improving decisions about health, wealth, and happiness New Haven : Yale University Press
- Kahneman, D. (2011). Thinking, fast and slow. New York: Farrar, Straus and Giroux
- Thaler, R. H. (2015). Misbehaving: The making of behavioral economics. W W Norton & Co.
- Luca, Michael, and Max Bazerman. The Power of Experiments: Decision-Making in a Data-Driven World. Cambridge, MA: MIT Press
Moreover, students will have to read some influential academic articles on Behavioural and Experimental Economics.

Group	Teacher	Department
Year 1	Daniel Sanchez Moscona	Economía, Finanzas y Contabilidad

Group	Teacher	Department
Year 2	Daniel Sanchez Moscona	Economía, Finanzas y Contabilidad

Group	Teacher	Department
Year 3	Daniel Sanchez Moscona	Economía, Finanzas y Contabilidad

Group	Teacher	Department
Year 4	Daniel Sanchez Moscona	Economía, Finanzas y Contabilidad