Behavioural Economics

This subject introduces students to empirical research demonstrating economically important patterns of behaviour that violate standard rationality assumptions, and to theoretical research aimed at capturing these behavioural patterns in tractable models. Most of the semester will be devoted to behavioural aspects of individual decision making, such as temptation and present-biased preferences, prospect theory, reference-dependent preferences, and over-confidence. We will also cover happiness research and behavioural public economics. This subject can be profitably taken alongside ECON30022, which in addition to the design of experiments also covers behavioural aspects of strategic interaction.

• 1Explain behavioural patterns uncovered in behavioural economics and how they relate to standard economics assumptions;
• 2Explain formal models developed by behavioural economists to tractably capture such findings; and
• 3Evaluate the contribution of behavioural economics to economic knowledge.