Introduction to Behavioural Economics
Undergraduate: Level 6
Monday 15 January 2024
Friday 22 March 2024
21 August 2023
Requisites for this module
EC111 or EC101
BSC C814 Psychology with Economics,
BSC C815 Psychology with Economics (Including Year Abroad),
BSC C816 Psychology with Economics (Including Placement Year),
BSC C817 Psychology with Economics (Including Foundation 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 C149 Economics with Psychology (Including Foundation Year),
BSC C158 Economics with Psychology (Including Year Abroad),
BSC C168 Economics with Psychology (Including Placement Year)
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.
The aims of this module 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.
By the end of this module, students will be expected to be able to:
- Have a basic understanding of how behavioural economics can improve our understanding of human behaviour.
- Apply economic reasoning to derive the main predictions of behavioural economics models and compare them with standard economic models.
- Interpret empirical evidence on behavioural economics and to understand its relevance to the related economic application.
- Use behavioural economic principles to analyse economic policies.
- Topic 1: Introduction: why do we need behavioural economics?
We discuss how and why behavioural economics emerged and which methods are used.
- Topic 2: Heuristics: how do we make decisions?
We discuss how heuristics and biases help make decisions in complex situations.
- Topic 3: Risk: how do we make decisions under risk?
We review expected utility and discuss risk aversion.
- Topic 4: Prospect Theory: how do we make risky decisions (involving losses)?
We discuss prospect theory and its implications.
- Topic 5: Applications of Prospect Theory
We discuss what we can learn from the theory and how we can apply it to various contexts.
- Topic 6: Time: how do we make intertemporal decisions?
We discuss discounted utility and self-control issues.
- Topic 7: Social preferences: how do we make decisions that also influence others?
We experience and discuss different ways of making decisions that also involve others.
- Topic 8: Social preferences: how can we explain them?
We discuss other-regarding preferences with a focus on fairness and reciprocity.
- Topic 9: Nudging: how can we influence decision making?
We discuss how nudges can be used to induce behaviour change.
- Topic 10: Policy: should we influence decision making?
We discuss ethical considerations of nudges and alternative methods to affect choices
The module will be delivered via:
- 20 hours lectures over one term (15 credits module)
- Five 1-hour classes
The module material can be accessed online in moodle.
Wilkinson, N. and Klaes, M. (2017) Introduction to Behavioral Economics
. 3rd edition. London: Bloomsbury Publishing PLC. Available at: https://ebookcentral.proquest.com/lib/universityofessex-ebooks/detail.action?docID=6234700
Just, D.R. (2014) Introduction to behavioral economics: noneconomic factors that shape economic decisions
. Hoboken, NJ: Wiley. Available at: https://ebookcentral.proquest.com/lib/universityofessex-ebooks/detail.action?docID=6488308&pq-origsite=primo
Thaler, R.H. (2016) 'Behavioral Economics: Past, Present, and Future', American Economic Review
, 106(7), pp. 1577–1600. Available at: https://doi.org/10.1257/aer.106.7.1577
Rabin, M. and Thaler, R.H. (2001) 'Anomalies: Risk Aversion', The Journal of Economic Perspectives
, 15(1), pp. 219–232. Available at: https://www.jstor.org/stable/2696549
Tversky, A. and Kahneman, D. (1981) 'The Framing of Decisions and the Psychology of Choice', Science: New Series
, 211(4481), pp. 453–458. Available at: https://www.jstor.org/stable/1685855
Barberis, N.C. (2013) 'Thirty Years of Prospect Theory in Economics: A Review and Assessment', Journal of Economic Perspectives
, 27(1), pp. 173–196. Available at: https://doi.org/10.1257/jep.27.1.173
Ericson, K.M. and Laibson, D. (2019) 'Intertemporal choice', in Handbook of Behavioral Economics - Foundations and Applications 2
. Elsevier, pp. 1–67. Available at: https://doi.org/10.1016/bs.hesbe.2018.12.001
Ariely, D. and Wertenbroch, K. (2002) 'Procrastination, Deadlines, and Performance: Self-Control by Precommitment', Psychological Science
, 13(3), pp. 219–224. Available at: https://www.jstor.org/stable/40063710
Benartzi, S. and Thaler, R.H. (2007) 'Heuristics and Biases in Retirement Savings Behavior', Journal of Economic Perspectives
, 21(3), pp. 81–104. Available at: https://doi.org/10.1257/jep.21.3.81
Gigerenzer, G. and Gaissmaier, W. (2011) 'Heuristic Decision Making', Annual Review of Psychology
, 62(1), pp. 451–482. Available at: https://doi.org/10.1146/annurev-psych-120709-145346
Camerer, C. and Thaler, R.H. (1995) 'Anomalies: Ultimatums, Dictators and Manners', Journal of Economic Perspectives
, 9(2), pp. 209–219. Available at: https://doi.org/10.1257/jep.9.2.209
Fehr, E. and Gächter, S. (2000) 'Fairness and Retaliation: The Economics of Reciprocity', Journal of Economic Perspectives
, 14(3), pp. 159–182. Available at: https://doi.org/10.1257/jep.14.3.159
Sunstein, C.R. (2014) 'Nudging: A Very Short Guide', Journal of Consumer Policy
, 37(4), pp. 583–588. Available at: https://search.ebscohost.com/login.aspx?direct=true&db=bsu&AN=99108896&site=ehost-live
Cass R. Sunstein (2015) 'The Ethics of Nudging', Yale Journal on Regulation
, 32(2). Available at: https://heinonline.org/HOL/Page?public=false&handle=hein.journals/yjor32&id=419
Bhargava, S. and Loewenstein, G. (2015) 'Behavioral Economics and Public Policy 102: Beyond Nudging', American Economic Review
, 105(5), pp. 396–401. Available at: https://doi.org/10.1257/aer.p20151049
The above list is indicative of the essential reading for the course.
The library makes provision for all reading list items, with digital provision where possible, and these resources are shared between students.
Further reading can be obtained from this module's reading list
Assessment items, weightings and deadlines
|Coursework / exam
||Main exam: In-Person, Open Book, 120 minutes during Summer (Main Period)
||Reassessment Main exam: In-Person, Open Book, 120 minutes during September (Reassessment Period)
Exam format definitions
- Remote, open book: Your exam will take place remotely via an online learning platform. You may refer to any physical or electronic materials during the exam.
- In-person, open book: Your exam will take place on campus under invigilation. You may refer to any physical materials such as paper study notes or a textbook during the exam. Electronic devices may not be used in the exam.
- In-person, open book (restricted): The exam will take place on campus under invigilation. You may refer only to specific physical materials such as a named textbook during the exam. Permitted materials will be specified by your department. Electronic devices may not be used in the exam.
- In-person, closed book: The exam will take place on campus under invigilation. You may not refer to any physical materials or electronic devices during the exam. There may be times when a paper dictionary,
for example, may be permitted in an otherwise closed book exam. Any exceptions will be specified by your department.
Your department will provide further guidance before your exams.
Module supervisor and teaching staff
Dr Lisa Spantig, email: firstname.lastname@example.org.
Lectures: Lisa Spantig / Classes: various teachers
For further information send an email message to email@example.com
Mr Pedro David Matos Serodio
Mr Teng Ge
Available via Moodle
Of 646 hours, 45 (7%) hours available to students:
601 hours not recorded due to service coverage or fault;
0 hours not recorded due to opt-out by lecturer(s).
* Please note: due to differing publication schedules, items marked with an asterisk (*) base their information upon the previous academic year.
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