LUISS

Programma

Syllabus “Behavioural Psychology and Economics” Spring 2011

A. Schedule and Instructors.

Cristina Bicchieri and Giacomo Sillari

Wednesday, 14:00-16:15, room 401 (V.le Romania)

Thursday, 14:00-16:15, room 201 (V.le Romania)

Office Hours: by appointment, room 526 (V.le Romania) (preferably on Thursday morning)

B. Description. This course provides an overview of behavioral economics, a discipline situated at the interface of psychology and economics. We will study and confront classical normative theories of rational behavior (rational choice and game theory), and descriptive theories of decision (prospect theory), placing special emphasis on the observational and experimental evidence supporting the latter. The central portion of the course will be devoted to the study of relevant papers form Tversky and Kahneman’s “heuristics and bias” program, revealing behavioral deviations from the normative principles of judgment and decision making in the face of uncertainty. The final part of the course will be devoted to recent experimental literature on strategic interaction.

C. Requirements and Grading. Class participation is mandatory. Students are expected to

(1) give short (15-20 minutes) group-presentation of literature on research evidence throughout the semester;

(2) produce an essay (~3,000 words) at the end of the semester.

There will be a final oral examination. Students will be graded on a 100 point basis according to the following weights:

30% Presentation

50% Essay

20% Exam

and according to the following schema:

90-100%       28-30

80-89%         25-27

70-79%         22-24

60-69%         20-21

50-59%         18-19

<50%             fail

D. Textbooks. Textbooks are available at the Arion bookstore or online at www.amazon.it (or www.amazon.co.uk):

Required

Scott Plous, The Psychology of Judgment and Decision Making, McGraw Hill

Ananish Chadhuri, Experiments in Economics, Routledge

Additional required materials will be made available to the students at the copy center or by the instructors

Suggested

Robyn Dawes and  Reid Hastie, Rational Choice in an Uncertain World, Sage

Cristina Bicchieri, Rationality and Coordination, Cambridge

Cristina Bicchieri, The Grammar of Society, Cambridge

E. Syllabus

March 2 Introduction

March 9, 10 Decision Theory: Normative Theory of Rational Choice

Decision Theory: Allais and Ellsberg paradoxes

Prospect Theory: Framing and Context

Readings: Plous chs. 7-8, Luce and Raiffa (website)

Suggested: Dawes, ch. 11

March 16 Prospect Theory: Descriptive Theory of Rational Choice

Heuristics and Biases: Loss Aversion

Readings: Plous chs. 4-6; 9

Suggested: Dawes, ch. 12

March 23, 24 Heuristics and Biases: Representative Thinking

Readings: Plous chs. 10, 11

Suggested Dawes, chs. 4, 5

Probabilistic Fallacies: Availability

Readings: Plous, chs. 12, 13

Suggested: Dawes, ch. 5

March 30, 31 Probabilistic Fallacies: Bayes’ theorem and Base-rates

Readings: Plous chs. 12, 13

Suggested: Dawes, ch. 8

Probabilistic Fallacies: Chance and Cause

Readings: Plous chs. 14, 15

Suggested: Dawes, ch. 7

April 6, 7 Game Theory: Dominance, Nash

Readings: Lecture Notes

Suggested: Bicchieri (Rationality), ch. 2

Game Theory: Refinements

Readings: Lecture Notes

Suggested: Bicchieri (Rationality), ch. 3

April 13, 14 Experiments:  Introduction

Readings: Chaudhuri, ch. 1

EASTER BREAK

April 27, 28 Experiments: Coordination Games

Readings: Chaudhuri, ch. 5

May 4, 5 Experiments: Ultimatum Game

Readings: Chaudhuri, ch. 2

May 11, 12 Experiments: Trust Game

Readings: Chaudhuri, ch. 3

May 18, 19 Experiments: Social Dilemmas

Readings: Chaudhuri, ch. 4

May 25, 26 TBA

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