Behavioral Psychology and Economics : Syllabus of The Course ( 2018-19)

Syllabus of the Course (2018-2019)

The Course is taught with Prof Giacomo Sillari

Course Content

♥ Essential readings

•1. Introduction. Do human being behave rationally? Decision Theory primer.

Allais and Ellsberg paradoxes.

♥Basic requirements for the Course

♥Utility Theory and Experimental Violations

♥Wason Selection task

♥The basic ideas of Behavioral Economics

♥ Readings: Plous, “The Psychology of Judgement and Decision Making”, ch 7 and 8
♥Tversky and Kahneman “Rational Choice and the framing of decisions” The Journal of Business, vol.59, n.4 pp. s251-s278 (required)

•2. Cognition. Dual Process of reasoning; judgment and decision making.

♥Required Readings: Kahneman, “Maps of Bounded Rationality” (Nobel Prize Lecture)

•3 Prospect Theory. Value function; Endowment Effect; Mental Accounting

♥Basic Properties of Prospect Theory

♥Required Readings: Plous, ibidem, chs. 9,

Shiller’ introduction to Prospect Theory

•4. Heuristics and Bias (Law of small numbers. Anchoring. Availability. Conjunction Fallacy.Base-rate Fallacy. Regression to the mean)

a♥. Required Readings: Plous, ibidem, chs. 10-15
b. Suggested Readings, Plous, ibidem, chs. 17-18

•5. Behavioral Law and Economics

a. Required Readings:
♥Jolls “Behavioral Law and Economics” 2004

•6. Behavioral Finance (or an experiment to be agreed with the students )

Required Readings:
♥Egidi and Sillari The Psychology of Financial Choices

Reference reading material

Tversky and Kahneman “Rational Choice and the framing of decisions” The Journal of Business, vol.59,n.4 pp. s251-s278

♥Download Tversky and Kahneman Rational Choice

Download Shiller’ talk on Prospect Theory

♥Download Expected Utility and Prospect Theory

♥Download The Dual Process Account of Reasoning

Daniel Kahneman, ” Maps of bounded rationality: A perspective on intuitive judgment and choice” , Nobel Prize Lecture, 20028-O

♥Download Kahnemann Nobel Lecture

♥Download Egidi and Sillari The Psychology of Financial Choices

♥♥Scott Plous, The Pshychology of Judgment and decision Making, McGraw-Hill ,1993:-|

Applications to : Political Choice, Finance, Law and Economics

♥George A. Quattrone and Amos Tversky “Contrasting rational and psychological analyses of political choice” , The American Political Science Review, Vol. 82, No. 3 (Sep., 1988), pp. 719-736 1988

♥Download Quattrone Tversky “Contrasting rational and psychological analyses of political choice”

Nicolas Barberis and Richard Thaler: “A Survey of Behavioral Finance”, Handbook of the Economics of Finance, Volume 1, Part B, pp. 1053-1075, 2003 – Elsevier;-)

Download Barberis Thaler Behavioral Finance

♥Christine Jolls, Behavioral Law and Economics Working Paper 12879 , NBER, 2007

Download Jolls Behavioral Law and Economics

Behind consumer decisions: Neuromarketing

Educational goals This course is intended to allow students to become familiar with the behavioral approach to economics and to political decision making . While this approach is based on the experimental data about human reasoning (provided by cognitive psychology) , students will be driven to test experimentally properties and assumptions on human decisions. Major goals will be that of enabling students to gain in-depth understanding of the major aspects of behavioral decision-making under uncertainty, and applications to economics, politics and finance, as well as to apply effectively the theories to ongoing debates, in order to raise their interest in carrying out research in this field.

Teaching method In-class lectures, computer-aided exercises and test sets, tutorials,

Assessment Method Computer-aided written and oral exam

Criteria for deciding on subject of final paper Exam grade, one-on-one colloquium

Preparatory courses Microeconomics , Elementary Statistics

Preliminary basic notions

Advanced Papers on Expected Utility

Records of some past examinations

Exams July 2013

Exams September 2013

Exams September 2014

Exams 2015-01

Exams 2015 May