Course Catalogue

Goals and contents of the module: Standard economic models make many assumptions and predictions about individual behavior. This course introduces new theories from Behavioral Economics, a young field of Economics that combines Economics and Psychology. In the light of experimental evidence, standard theories of risk, time and social preferences are revisited, and more appropriate behavioral models introduced. Various forms of cognitive limitations in information processing are presented and consequences for economic behavior are highlighted. The course aims to provide access to theoretical concepts that take into account the nature of the human psyche. In particular, to understand how real behavior differs from the standard theoretical predictions and how to account for those “irregularities”. Expected competences acquired after completion of the module: Successful students will have a raised awareness for commonly made assumptions in standard microeconomic theory and their consequences in the modeled econoic behavior. Students will know alternative ways of thinking about individual preferences and cognitive processes in economic decisions. Further information: In the exercise, we will discuss several papers mentioned in the lecture in detail. For that purpose, students will present and discuss one paper in small groups. The aim is to critically evaluate economic research.