Behavioral and Experimental Economics
- Course Name: Behavioral and Experimental Economics
- Planned to be offered: July 30 - August 17, 2012
- Chronology: MSc
- ECTS: 7.5 ECTS
- Teacher: Jean-Robert Tyran, Jean-Robert.Tyran@econ.ku.dk ,
- Schedule: Every working day 10-13 in CSS 15.3.01. (31/7, 3/8 og 8/8 kl. 10-13: IT lab 5.0.34 og 5.0.40)
Once you have an approved registration for the course in the student selfservice at KUnet you will automatically get access to the course website in Absalon.
Academic Aims - Students learn how the toolbox of experimental economics can be used in research, and learn to be critical consumers of the rapidly growing behavioral and experimental economics literature. More generally, the course contributes to a deeper understanding of the basic principles of rationality and self-interest in economics. - Students learn in what ways people systematically deviate from rational and self-interested behavior in individual decision making. This knowledge contributes to avoid pitfalls in decision-making. - Students learn in what ways markets and other forms of economic interaction can multiply or mitigate these errors. This knowledge is most relevant in the context of institutional choice or design (e.g. from an economic policy perspective). - Students participate in a series of demonstration experiments and therefore learn how experiments work in practice from the participants’ perspective. - Students write a series of short papers to analyze experimental data and to reflect on the data and the experimental design. Students therefore improve their writing and reasoning skills.
Course Content Behavioral economics attempts to make economics a more relevant and powerful science of human behavior by integrating insights from psychology and the social sciences into economics. Experimental economics adapts methods developed in the natural sciences to study economic behavior. Experiments are valuable in testing to what extent the integration of insights from other disciplines into economics is necessary and fruitful. Behavioral and Experimental Economics is a vibrant field of research in economics and sheds new light on many old and important issues in economics. The field has received wide recognition in recent years, for example by the award of the Nobel Prize in Economics 2002 to Daniel Kahneman and Vernon Smith. The field is rapidly growing. This course can therefore not provide a comprehensive overview but concentrates on selected topics instead.
The course addresses the following questions: What are the advantages and limitations of experimental economics? How important are deviations from the assumptions of full rationality and strict self-interest in determining outcomes of economic interaction? It is argued that identifying individual-level “anomalies” is not sufficient to demonstrate their economic and social importance. Instead, it must be analyzed how institutions mitigate and multiply these anomalies. A broad range of institutions, including markets, bargaining and voting is discussed. Successful completion of this course earns students 7.5 ECTS credits. A detailed Syllabus will be posted on http://www.econ.ku.dk/tyran/Teaching/overview.htm
Language The course is taught in English. The language of examination is English.
Prerequisites A sound knowledge of microeconomics and game theory at an intermediate level is required (e.g. Varian: Intermediate Microeconomics, Gibbons: A Primer in Game Theory).
Registration: Will be annonced later.
Teaching and Work Forms The course has three elements. - Demonstration experiments. Students participate in demonstration experiments in our experimental laboratory. - Assignments: Students analyze the data from the demonstration experiment (i.e. their own behavior) and reflect on possible explanations for observed behavior. Detailed knowledge of the literature is not required at this stage. Assignments are group work (groups of 2 or 3). Assignments are graded as “pass” or “fail”. A student needs to earn 1 “pass” on assignments and is free to choose among the assignments. Deadlines are strict (see handout). - Lectures: I discuss selected examples of research in behavioral and experimental economics. I explain the relevance of demonstration experiments and how the data compares to findings in the literature.
Formal Requirements Participation in experiments and analysis of experimental data is required for admission to final exam. a) Participating in all demonstration experiments is an essential element of this course. However, students are not expected to prepare these experiments. Students earn a “pass” if they are present (see schedule), are attentive and make “reasonable” choices during the experiment. b) Students must provide a rough analysis after each experimental session and answer specific questions concerning the experiment in a paper (“assignment”). Knowledge of the literature is not expected at this stage (we will talk about the experiments in the lecture). Maximum length of a paper: 4 pages text (not counting graphs, tables, see separate guidelines for more details). Students work in groups. Papers are graded as "pass" or "fail" and 1 "pass" paper are required for admission to the final exam.
Examination The final exam covers the content of the lecture (2 hours, closed book, English). The assessment language is English. Date and place of the exam to be announced.