Behavioural Economics

Description

Practical information Course ID: FEB13061 Credits: 4 EC Instruction language: English Registration procedure: Via OSIRIS Secretariat: Support Office Applied Economics, T18-13, 010 4082776, office.ae@ese.eur.nl Course description Content: This course presents models developed in behavioural economics as alternatives to the standard economic models. The student will understand why the need for behavioral models arose. The students will learn the main results of behavioral economics and the methodologies developed to measure them. This course adds to the second year-course "Introduction to behavioral economics" (Inleiding gedragseconomie, FEB12015 - FEB12015X) in three ways: - Students will learn what assumptions of standard economic theories are changed by behavioral models. - What results are possible when this assumptions are changed - Methods to measure the new introduced behavioral constructs. Learning goals: - Understand distinction between normative and descriptive theories. - Understand limitations of standard economic theories. - Recognize assumptions that allow for more descriptive models. - Understand how to measure behavioral variables. - Recognize when to use methods of measurement of behavioral variables. Changes as compared to previous year: NA. Extra: None Study materials Kahneman, D., & Tversky, A. (1979). Prospect Theory: An Analysis of Decision under Risk. Econometrica, 47(2), 263–291. Tversky, A., & Kahneman, D. (1992). Advances in prospect theory: Cumulative representation of uncertainty. Journal of Risk and uncertainty, 5(4), 297-323. Laibson, D. (1997). Golden eggs and hyperbolic discounting. The Quarterly Journal of Economics, 112(2), 443-478. O'Donoghue, T., & Rabin, M. (1999). Doing it now or later. American economic review, 89(1), 103-124. Fehr, E., & Schmidt, K. M. (1999). A theory of fairness, competition, and cooperation. The quarterly journal of economics, 114(3), 817-868. Bolton, G. E., & Ockenfels, A. (2000). ERC: A theory of equity, reciprocity, and competition. American economic review, 90(1), 166-193.; Wakker, P. P. (2010). Prospect theory: For risk and ambiguity. Cambridge university press. Spalt, O. G. (2013). Probability weighting and employee stock options. Journal of Financial and Quantitative analysis, 48(4), 1085-1118. Dimmock, S. G., Kouwenberg, R., Mitchell, O. S., & Peijnenburg, K. (2021). Household portfolio underdiversification and probability weighting: Evidence from the field. The Review of Financial Studies, 34(9), 4524-4563. DellaVigna, S., Lindner, A., Reizer, B., & Schmieder, J. F. (2017). Reference-dependent job search: Evidence from Hungary. The Quarterly Journal of Economics, 132(4), 1969-2018. Dittmann, I., Maug, E., & Spalt, O. (2010). Sticks or carrots? Optimal CEO compensation when managers are loss averse. The Journal of Finance, 65(6), 2015-2050. Abdellaoui, M., Baillon, A., Placido, L., & Wakker, P. P. (2011). The rich domain of uncertainty: Source functions and their experimental implementation. American Economic Review, 101(2), 695-723. Bryan, G. (2019). Ambiguity aversion decreases the impact of partial insurance: Evidence from African farmers. Journal of the European Economic Association, 17(5), 1428-1469. Dimmock, S. G., Kouwenberg, R., & Wakker, P. P. (2016). Ambiguity attitudes in a large representative sample. Management Science, 62(5), 1363-1380. Duflo, E., Kremer, M., & Robinson, J. (2011). Nudging farmers to use fertilizer: Theory and experimental evidence from Kenya. American economic review, 101(6), 2350-90. DellaVigna, S., & Malmendier, U. (2004). Contract design and self-control: Theory and evidence. The Quarterly Journal of Economics, 119(2), 353-402.119(2), 353-402. Ashraf, N., Karlan, D., & Yin, W. (2006). Tying Odysseus to the mast: Evidence from a commitment savings product in the Philippines. The Quarterly Journal of Economics, 121(2), 635-672. Gneezy, U., Leibbrandt, A., & List, J. A. (2016). Ode to the sea: Workplace organizations and norms of cooperation. The Economic Journal, 126(595), 1856-1883. Kaur, S., Kremer, M., & Mullainathan, S. (2015). Self-control at work. Journal of Political Economy, 123(6), 1227-1277.Political Economy, 123(6), 1227-1277. Falk, A. (2007). Gift exchange in the field. Econometrica, 75(5), 1501-1511. Bandiera, O., Barankay, I., & Rasul, I. (2005). Social preferences and the response to incentives: Evidence from personnel data. The Quarterly Journal of Economics, 120(3), 917-962. Entrance requirements Entrance requirements course enrolment: You must meet the following requirements Enrolled for one of the following degree programmes BSc2 Econometrics ECON-DIV Econometrics and Operations Research Economics and Business Economics International Bachelor Econometrics and Operations Research International Bachelor Economics and Business Economics Period Enrolment periods: Enrolment period: 1 December 2025 until 16 January 2026 23:59 Unenrolment: until 16 January 2026 23:59 Period of education: 29 december 2025 until 28 februari 2026 Assessment Assessment materials: Selected articles Assignments Everything discussed in class Assessments (result in OSIRIS): Test weight: 30; Test weight: 70 Assessment: Resit opportunity