This course provides an introduction to behavioural economics with a particular emphasis on its ambivalent relationship with the rest of economic theory. On the one hand, by describing and conceptualising how human decisions depart from rationality, behaviourists place themselves at the forefront of the critique of neoclassical economics. On the other hand, behavioural economics remain largely indebted to rational decision theorists, who long before sought to improve the realism of their models. We will therefore begin with an overview of neoclassical decision theory, including empirical applications and measurement, before exploring its legacy and points of clash with modern behavioural economics and economic psychology.
1. Neoclassical decision theory: risk and time preferences
- Varian, H. R. 2009. Intermediate Microeconomics: A Modern Approach. W. W. Norton & Company, 8th edition.
- Andreoni, J. and C. Sprenger. 2012. “Risk preferences are not time preferences.” American Economic Review 102, no. 7: 3357–3376.
- Callen, M., M. Isaqzadeh, J. D. Long and C. Sprenger. 2014. “Violence and risk preference: Experimental evidence from Afghanistan.” American Economic Review 104, no. 1: 123–148.
- Voors, M. J., E. Nillesen, P. Verwimp, E. H. Bulte, R. Lensink and D. P. Van Soest. 2012. “Violent conflict and behavior: A field experiment in Burundi.” American Economic Review 102, no. 2: 941–964.
2. Social preferences
- Bauer, M., C. Blattman, J. Chytilová, J. Henrich, E. Miguel and T. Mitts. 2016. “Can war foster cooperation?” Journal of Economic Perspectives 30, no. 3: 249–274.
- Bauer, M., A. Cassar, J. Chytilová and J. Henrich. 2014. “War’s enduring effects on the development of egalitarian motivations and in-group biases.” Psychological Science 25, no. 1: 47-57.
- Cassar, A., P. Grosjean and S. Whitt. 2013. “Legacies of violence: Trust and market development.” Journal of Economic Growth 18, no. 3: 285–318.
- Gilligan, M. J., B. J. Pasquale and C. Samii. 2014. “Civil war and social cohesion: Lab‐in‐the‐field evidence from Nepal.” American Journal of Political Science 58, no. 3: 604—619.
- List, J. A. 2007. “On the interpretation of giving in dictator games.” Journal of Political Economy 115, no. 3: 482–493.
3. From neoclassical to behavioural economics
- Axelrod, R. 1997. “The dissemination of culture: A model with local convergence and global polarization ”. The Journal of Conflict Resolution 41, no. 2: 203–226.
- Axelrod, R. and R. Keohane. 1985. “Achieving cooperation under anarchy: Strategies and institutions”. World Politics 38, no. 1: 226–254.
- Kahnemann, D. and A. Tversky. 1984. “Choice, values, and frames.” American Psychologist 39, no. 4: 341–350.
- Kahnemann, D. and A. Tversky. 1979. “Prospect theory: An analysis of decision under risk.” Econometrica 47: 264–291.
- Kahnemann, D. 2012. Thinking, Fast and Slow. Penguin, reprint edition.
- Simon, H. 1955. “A behavioral model of rational choice”. The Quarterly Journal of Economics 69, no. 1: 99–118
- van den Assem, M., D. van Dolder and R. Thaler. 2012. “Split or steal? Cooperative behavior when the stakes are large.” Management Science, 58, no. 1: 2—20.
4. Topics in economic psychology
- Axelrod, R. 2015. “Introduction” in Axelrod, R. (ed.). Structure of Decision: The Cognitive Maps of Political Elites. Princeton University Press, Princeton, New Jersey: 3–75.
- Chance, Z., M. I. Nortona, F. Ginob, and D. Ariely. 2011. “Temporal view of the costs and benefits of self-deception.” Proceedings of the National Academy of Sciences 108, no 3: 15655–15659.
- Falk, A. 2017. “Facing yourself: A note on self-image.” IZA Discussion Paper Series, no. 10606.
- Hart, J. 2015. “Comparative cognition: Politics of international control of the oceans” in Axelrod, R. (ed.). Structure of Decision: The Cognitive Maps of Political Elites. Princeton University Press, Princeton, New Jersey: 180–220.
- Simon, H. 1956. “Rational choice and the structure of the environment”. Psychological Review 63, no. 2: 129–138.
- Simon, H. 1985. “Human nature in politics: The dialogue of psychology with political science”. The American Political Science Review 79, no. 2: 293–304.
- Thaler, R. H. and H. M. Shefrin. 1981. “An economic theory of self-control.” Journal of Political Economy 89, no. 2: 392–406.