BA Modern Language and Business & Management (Russian)

ECON20022 OR ECON20512

Expose students to the main topics in behavioural economics and advance their understanding of neoclassical microeconomics when combined with empirically and experimentally motivated assumptions, mostly based on psychological realism, while having the ultimate goal to provide a better understanding of economic behaviour and welfare implications. The main topics in Behavioural Economics are decision theory under conditions of risk and uncertainty; reference-dependent preferences and loss aversion; time-preferences; social preferences, and their applications to economics.  

At the end of this course unit, it is expected that you will be able to:

1. Show a clear understanding of the preference conditions underlying expected and non-expected utility theories and be able to apply the theories to solve economic problems at the appropriate level.
2. Demonstrate a profound understanding of elicitation methods based on these theories.
3. Give a clear overview  of experimental tests for these preference conditions.
4. To develop a framework to test particular preference  conditions or theories.
5. Apply these new models to a variety of economic problems and derive original results.

• Decision theory under conditions of risk and uncertainty.
• Experimental Evidence.
• Prospect Theory.
• Experiments.
• Foundations.
• Applications.
• Time-preferences.
• Classical and Modern Models and Applications.
• Social Preferences.
• Other-regarding preferences.
• Fairness/Reciprocity.
• Experimental Evidence.

Synchronous activities (such as Lectures or Review and Q&A sessions, and tutorials), and guided self-study

• Assignments (10%).
• Final Exam - both problem solving and short essay (90%).
   

• Receive feedback during exercise classes where active problem solving will be implemented.
• Experiments run in class and in-class discussions of experimental results.
• Office hours.

• Kahneman, Knetsch, Thaler (1991) “Anomalies: The Endowment Effect, Loss Aversion, and Status Quo Bias", Journal of Economic Perspectives, 5(1): 193-206.
• Kahneman, D., and Tversky, A. (1979), “Prospect Theory: An Analysis of Decision Under Risk”, Econometrica 47, 263-291.
• Charness and Rabin (2002) “Understanding Social Preferences with Simple Tests" Quarterly Journal of Economics, 117(3): 817-869.
• Johannes Abeler, Armin Falk, Lorenz Goette and David Huffman, 2011. “Reference Points and Effort Provision”, American Economic Review, Vol. 101(2): 470-492.
• Rabin (2000), “Risk Aversion and Expected-Utility Theory: A Calibration Theorem”, Econometrica, 68(5): 1281-1292.
• Thaler (1981), “Some Empirical Evidence on Dynamic Inconsistancy”, Economics Letters 8:201-207.