Introduction to Behavioural Economics

The details
Colchester Campus
Undergraduate: Level 6
Monday 13 January 2020
Friday 20 March 2020
17 April 2019


Requisites for this module



Key module for

BSC C814 Psychology with Economics,
BSC C815 Psychology with Economics (Including Year Abroad),
BSC C816 Psychology with Economics (Including Placement Year),
BA C841 Economics with Psychology,
BA C851 Economics with Psychology (Including Year Abroad),
BA C861 Economics with Psychology (Including Placement Year),
BSC C148 Economics with Psychology,
BSC C158 Economics with Psychology (Including Year Abroad),
BSC C168 Economics with Psychology (Including Placement Year)

Module description

This module introduces students to the field of behavioural economics which combines economic analysis with insights from psychology to understand human behaviour.
This module is offered at level 5 (second year undergraduate) and at level 6 (third year undergraduate). While the content is the same for both levels, the learning outcomes as assessed in the modules are slightly different between the two levels.

Module aims

The module aims are:
• To provide students with an understanding of human behaviour through the lens of behavioural economics;
• To develop an understanding of when the application of behavioural economic analysis is appropriate;
• To develop an understanding on how behavioural economics can inform economic policies;
• To be able to critically read and assess the academic literature on behavioural economics;

Module learning outcomes

Upon the completion of this module third year undergraduate students should be able to:
1) Have a clear and informed understanding of how behavioural economics can improve our understanding of human behaviour;
2) To apply analytical and economic reasoning to derive the main predictions of behavioural economics models and compare them with standard economic models;
3) Be able to evaluate and interpret empirical evidence on behavioural economics and to understand its relevance to the related economic application;
4) Be able to conceptualize how behavioural economic principles can be applied in economic policies;

Module information


Lecture 1 Introduction to behavioural economics
Introduction to behavioural economics. Limits of rationality. Methods in behavioural economics
Reading: Wilkinson and Klaes Ch. 1 and 2
Lecture 2 Choices, heuristics and biases I
Standard economic model. Weaknesses of the standard economic model
Reading: Wilkinson and Klaes Ch. 3 and 4

Lecture 3 Choices, heuristics and biases II
Bounded rationality and heuristics, biases
Reading: Wilkinson and Klaes Ch. 3 and 4

Lecture 4 Prospect theory I
Introduction to prospect theory, framing and loss aversion
Reading: Wilkinson and Klaes Ch. 5

Lecture 5 Prospect theory II
Applications of prospect theory, empirical evidence, endowment effect, limitations
Reading: Wilkinson and Klaes Ch. 5

Lecture 6 Time inconsistency I
Introduction to discounted utility model. Exponential vs hyperbolic discounting, present bias
Reading: Wilkinson and Klaes Ch. 7 and 8

Lecture 7 Time inconsistency II
Empirical evidence on time inconsistency, procrastination
Reading: Wilkinson and Klaes ch. 8

Lecture 8 Fairness and social preferences
Dictatorship game and social preferences, fairness and reciprocity
Reading: Wilkinson and Klaes ch. 10

Lecture 9 Incentives and Nudges I
Government paternalism, monetary incentives and Nudge Theory
Reading: Wilkinson and Klaes ch. 11

University week 11 Incentives and Nudges II
Applications of Nudge Theory
Reading: Wilkinson and Klaes ch. 11

Learning and teaching methods

The module will consist of 20 hours lectures over one term (15 credits module) plus 5 (one-hour) classes. The module material can be accessed online in moodle.


This module does not appear to have a published bibliography.

Overall assessment

Coursework Exam
50% 50%


Coursework Exam
50% 50%
Module supervisor and teaching staff



External examiner

No external examiner information available for this module.
Available via Moodle
Of 53 hours, 53 (100%) hours available to students:
0 hours not recorded due to service coverage or fault;
0 hours not recorded due to opt-out by lecturer(s).


Further information

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