Course
Advanced Behavioral Economic Theory - 4 ECTS
This PhD course covers the most important ideas in behavioral economics, diving deep into primary sources of theoretical and empirical research. Behavioral economics has become an influential sub-field over the past few decades. In fact, the most recent Nobel Prize in Economics was awarded to Richard Thaler for his foundational work.
Neoclassical economic models assume that decision makers are rational and self-interested with consistent preferences over time, and that deviations from these assumptions are not systematic. Behavioral economics has challenged this approach, by taking into account knowledge from other fields, principally psychology, and using experimental methods to build rigorous models of human behavior.
This course will takes a cross-cutting approach: even if the research goal is not explicitly to test a hypothesis that falls under one of these categories, accounting for these factors can help researchers to better design studies covering a broad range of themes.
The course is intended for PhD candidates in economics or related fields. Participants should have knowledge of basic economic theory and be able to solve basic optimization problems.
Activities
Meetings will have the following format:
- Lectures.
- Seminars:
- Reading seminars: student presentations of relevant literature from a list of selected articles.
- Interactive seminars: discuss problem sets (prepared outside of class).
- Student presentation seminars: participants present their own research (or research plans), with a focus on incorporating topics from the course.
Outside of class, participants will be expected to read the relevant literature and work on problem sets, in addition to preparing presentations and the final project.
Learning outcomes
After successfully completing this PhD course, students will be able to:
- Understand the key topics of behavioral economic theory listed above. Specifically, students should operationalize this knowledge in order to:
o Understand both the mechanics of each formal model covered, as well as analyze the models to deduce the underlying logic.
o Apply these theories to explain economic behavior.
o Apply this knowledge the student’s respective field of study.
o Evaluate the empirical evidence supporting these models.
In addition, students should develop skills to:
- Independently read and understand articles in peer-reviewed journals that include behavioral economic models.
- Create models of economic behavior for thier own research.
Target group
PhD candidates in Economics, Management Decision Support, or other Social Science students who have a solid foundation in Economic theory or mathematical modelling.
Min/max number of participants: 5/10.
Assumed Prior Knowledge
Basic economic theory. The course complements Advanced Microeconomics (ECH-51806), which presents the conventional approach to microeconomic theory and Behavioral and Experimental Economics (ECH-51306), which concentrates on empirical methods in experimental economics and is open to bachelors and masters students. (Though these courses are not required prerequisites.)
Assessment:
Students will be graded on the following elements:
- Reading seminar presentation (15%)
- Incorporation of behavioral economic theory in own research: (40%)
i) Written research (plan) that incorporates a topic from the course, and includes a formal model.
ii) Class presentation of i).
- In class written exam (30%)
- Class participation (including problem sets in Interactive seminars 3 & 4) (15%)
Sessions
The sessions are each Tuesday morning and Thursday morning from 9.00-11.00 hrs
| Tuesday morning | Thursday morning |
|---|---|
| 30 October | 1 November |
| 6 November | 8 November |
| 13 November | 15 November |
| 20 November | 22 November |
| 27 November | 29 November |
| 4 December | 6 December |
| 11 December | 13 December |
| Week | Activity |
|---|---|
| 1 | L: Behavioral economics: What does it mean to be rational? - Reading: Khaneman (2003) |
| L: Social preference | |
| 2 | S: Reading seminar: Social preferences |
| S: Interactive seminar: Problem sets on cooperative games (From Bowles 2006). Chpts. 1-2 | |
| 3 | S: Interactive seminar: Problem sets on cooperative games (From Bowles 2006). Chpts. 3-5 |
| L: Intertemporal choice: discounting and present bias - Reading: Laibson (1997) | |
| 4 | S: Reading seminar: Present bias |
| L: Risk preferences and loss aversion - Reading: O’Donoghue and Somerville (2018) | |
| 5 | S: Interactive seminar: problem sets on time and risk |
| L: Information and inattention - Reading: Gabaix (2017) | |
| 6 | S: Student presentations |
| S: Student presentations | |
| 7 | EXAM |
Materials:
Materials will consist of seminal articles in peer-reviewed journals.
Articles for reading seminars will be posted to the course website.
We will cover Part I of Bowles (2006), Microeconomics: Behavior, Institutions and Evolution.
Additional background reading for Lectures:
Gabaix, Xavier. 2017. “Behavioral Inattention”, NBER Working Paper 24096.
http://www.nber.org/papers/w24096.pdf
Khaneman, Daniel. 2003. “Maps of Bounded Rationality.” American Economic Review, 93(5):1449-1470.
Laibson, David. 1997. “Golden Eggs and Hyperbolic Discounting” Quarterly Journal of Economics, 112(2): 443-478.
O'Donoghue , Ted and Jason Somerville. 2018. “Modeling Risk Aversion in Economics”, Journal of Economic Perspectives, 32(2):91-114.
Course fee
| WASS, PE&RC and WIMEK/SENSE PhDs with TSP | 275 euro |
| a) all other PhD candidates, b) Postdocs and staff of the above mentioned Graduate Schools | 550 euro |
| All others | 750 euro |
NB1: for some courses, PhD candidates from other WUR graduate schools with a TSP are also entitled to a reduced fee. Please consult your Education/PhD Programme Coordinator for more information