How do cognitive biases influence economic decision-making and outcomes? What role do emotions and heuristics (mental shortcuts) play in economic decision-making? How do they sometimes lead to sub-optimal choices? How can behavioural economics principles be used to improve the design of programmes and policies? The module introduces you to behavioural economics, which combines economic analysis with insights from psychology to understand human behaviour. It starts by briefly presenting the classical model of rational, selfish economic agents, outlining limitations of this model in predicting and explaining behaviour. Thereafter, it introduces you to models which relax assumptions of the classical model, incorporating insights from psychology instead, and covers evidence on the power of these behavioural models in explaining human behaviour. Finally, it covers the implications of these models for the design of public policy.
Lecture 16, Workshop 16
Test. An online open-book test lasting three days, consisting of three sections worth 40%.
2,500 words Extended Writing. Assessment Details: Essay worth 60%.
Reassessment Method: Single Instrument. 100% written assessment (2,500 words)
On successfully completing the module, students will be able to:
1) Demonstrate knowledge and understanding of how behavioural approaches can be integrated into models of human behaviour
2) Understand the main predictions of behavioural economics models and compare them with standard economic models
3) Be able to interpret empirical evidence on behavioural economics and to understand its relevance to real world phenomena
4) Gain an understanding of how behavioural economics principles can be used to better design economic policies.
5) Engage critically in understanding models of human behaviour
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