SAM17 Economics and Psychology

• Topics

  The course will introduce students to the exciting world of Economics and Psychology - also know as Behavioral Economics. Traditional economic models have assumed that people are perfectly rational and seek to maximize their own payoffs. This course studies the economic consequences of acknowledging that people have bounded rationality and often are motivated by moral and social considerations. Issues linked to sustainability, such as how to secure a fair and efficient allocation of resources beneficial for both today's and future generations, will be covered in the course.

  The course will also introduce students to the scientific method of experiments. We will discuss different types of experiments, and the pros and cons of experimentation. Students will also get the chance to design and implement their own economic experiment. This will be done in groups of 3-4 students, and a written report based on the experiment will count towards the final grade. 

  Some of the topics the course will cover are:

  1. Reference dependence and loss aversion
  2. Choice over time and present bias
  3. Social preferences
  4. Trust and cooperation
  5. How emotions affect choice

• Learning outcome

  After successful completion of the course, the student can:

  Knowledge

  • Discuss different decision theories.
  • Critically reflect on the limitations of the standard economic model.
  • Discuss the use of experimental methods in economic research.
  • Critically evaluate the connection between economic incentives and other sources of motivation.

  Skills

  • Demonstrate how social preferences and bounded rationality can shed light on important questions the society face today - such as sustainability and inequality.
  • Formulate an independent research hypothesis that can be experimentally tested.
  • Design and execute an experiment according to standard practice in behavioral economics.
  • Make well-founded business judgments based on a richer understanding of human behavior.

  General competence

  • Plan and execute a group assignment that extends over a long period of time, and in accordance with ethical guidelines.
  • Present academic content in a research format both written and orally.
  • Read articles from peer-reviewed journals.

• Teaching

  The course will use a combination of lectures, pre-recorded videos and in-class discussions. Active participation is expected and highly encouraged.      

  The lectures will be given by the course responsible, and potentially in the form of guest appearances from faculty at FAIR - Centre for Experimental Research on Fairness, Inequality and Rationality. 

• Required prerequisites

  None.

• Compulsory Activity

  Oral presentation of group term paper. 

  Previously acquired course approvals are valid.

• Assessment

  1. Individual digital school exam, 3 hours (70%)

  2. Term paper (30%) - a written report describing the design of an economic experiment, conducted in groups of 3-4 students. Deadline for term paper is late October, and it is distributed 4 weeks prior to the deadline. (30%)

  The exam and term paper must be answered in English.   

  An assessment will not be organised in the the non-teaching semester (spring).

• Grading Scale

  A-F.

• Computer tools

  None.  

• Literature

  - About 10 scientific articles.

  - Lecture notes.