Syllabus of the Course (2019-20)
The Course is taught with Prof Giacomo Sillari
| Course Content | |
•1. Introduction. Do human being behave rationally? Decision Theory primer. Allais and Wason paradoxes.
Required Readings:
- Required Readings:
- Plous, “The Psychology of Judgement and Decision Making”, ch 7 and 8
- Utility Theory and Experimental Violations: From Bernoulli to Kahneman
- “Tversky Kahneman Rational Choice and the framing of decisions” The Journal of Business, vol.59, n.4 pp. s251-s278 limited to par 1,2,3
•2. Cognition. Dual Process of reasoning; judgment and decision making.
- Required Readings:
- Introduction
- Kahneman, “Maps of Bounded Rationality” (Nobel Prize Lecture) limited to par 1,2,3
- Evans “The Dual Process Account of Reasoning”
•3 Prospect Theory. Value function; Endowment Effect; Mental Accounting
- Required Readings:
- Basic Properties of Prospect Theory
- Plous, ibidem, chs. 9,
- Shiller’ introduction to Prospect Theory (suggested)
•4. Heuristics and Bias (Law of small numbers. Anchoring. Availability. Conjunction Fallacy.Base-rate Fallacy. Regression to the mean)
- Required Readings: Plous, ibidem, chs. 10-15
- Suggested Readings: Plous, ibidem, chs. 17-18
•5. Behavioral Law and Economics (optional)
- Suggested Readings:
- Jolls “Behavioral Law and Economics” 2004
•6. Behavioral Finance (optional)
- Suggested Readings:
- Egidi and Sillari The Psychology of Financial 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;
7 Political Decision Making
- Suggested Readings:
- George A. Quattrone and Amos Tversky “Contrasting rational and psychological analyses of political choice“
- Walter Quattrociocchi, Antonio Scala, Cass R. Sunstein “Echo Chambers on Facebook”Echo Chambers on Facebook
- Cinelli, Quattrociocchi et al. “The COVID19 Social Media Infodemic“
Thinking ahead
- The Basic Laws of Human Stupidity (suggested)
- Barberis-Thaler Short discussion on the main cognitive biases
Reference reading material
Scott Plous, The Pshychology of Judgment and decision Making, McGraw-Hill ,1993:-|
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
Advanced Papers on Expected Utility
Records of some past examinations
