Behavioural Economics

Module code: EC3089

This module samples from the rich literature on behavioural economics, the fastest growing area of economics.  It is interdisciplinary and combines together economic theory, psychology, sociology, evolutionary biology, and even neuroscience.  The aim of the module is to provide you with an exposure to the theory and evidence on human economic behaviour under various settings (risk, uncertainty, time, strategic interaction).  We show that the evidence is not kind to several neoclassical theories that you might have sampled before including expected utility theory; exponential time discounting; Nash equilibrium and its refinements; and models of unbounded rationality.  We also show that human preferences are other-regarding, and incorporate altruism, envy, conditional reciprocity, and morality.

The module is also rich in applications.  For instance you will learn that capuchin monkeys have similar risk preferences to us; why drivers quit early in a rainy day in New York when the real wage is high; why we procrastinate; what accounts for addictive behaviours; why we trust others and engage in gift exchange; and why we are boundedly rational in strategic interaction relative to a Nash equilibrium and its refinements.