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2019/2020  KAN-CCMVV1913U  Applied Behavioral Economics: Experiments within Firms, Non-Profits, and Public Institutions

English Title
Applied Behavioral Economics: Experiments within Firms, Non-Profits, and Public Institutions

Course information
Language English
Course ECTS 7.5 ECTS
Type Elective
Level Full Degree Master
Duration One Semester
Start time of the course Autumn
Timetable Course schedule will be posted at calendar.cbs.dk
Max. participants 60
Study board
Study Board for MSc in Economics and Business Administration
Course coordinator
  • Luigi Butera - Department of Economics (ECON)
Main academic disciplines
  • Economics
Teaching methods
  • Blended learning
Last updated on 04-07-2019

Relevant links
Learning objectives
Students having successfully participated in the course are able to:
  • Explain what behavioral biases are and how they may affect people’s decisions.
  • Explain what non-monetary incentives are and how they may affect people’s decisions.
  • Formulate testable research hypotheses.
  • Formulate viable identification strategies for hypotheses testing.
Course prerequisites
1. A sound knowledge of microeconomics and econometrics is required. Students should have taken at least one microeconomics course, and one statistics/econometrics course. Students who do not have good knowledge of these topics but still wish to enroll, should be prepared to work harder to catch up.
2. Basic knowledge of statistical packages like Stata is an asset.
Examination
Applied Behavioral Economics: Experiments within Firms, Non-Profits, and Public Institutions:
Exam ECTS 7,5
Examination form Home assignment - written product
Individual or group exam Individual exam
Size of written product Max. 15 pages
Assignment type Written assignment
Duration Written product to be submitted on specified date and time.
Grading scale 7-point grading scale
Examiner(s) One internal examiner
Exam period Winter
Make-up exam/re-exam
Same examination form as the ordinary exam
Students will receive take-home questions, but will not be allowed to hand-in a new report.
Description of the exam procedure

Students will work on an 8-pages (max) report. Further, two additional questions will be posted a few days before of the final deadline to submit the written product, and both questions have to be answered in 2 pages max, for a total of about 10 pages.
Course content, structure and pedagogical approach

The most successful and innovative firms, organizations and institutions in the world have all one thing in common: a dedicated team of economists working closely with data scientists to understand the economics behind their businesses.  

 

Randomized Controlled Experiments (RCTs), combined with Economic Theory and Behavioral Economics represent the gold standard to learn about the world.   

 

This course aims at providing students with a hands-on introduction to the tools necessary to apply science-based decision-making within firms, non-profit organizations and public institutions.   The goals is not only to enable students to become consumers of the empirical literature on behavioral and experimental economics, but also active contributors of original and testable ideas to improve the activities, processes, and organizational architecture of their future workplaces, whether those might be for-profit firms, non-profit organizations, or public institutions.

 

We will begin the course by reviewing neoclassical and behavioral theories of individual preferences, as well as the empirical and experimental evidence supporting (or refuting) those theories. This may include (but not limited to): expected utility and prospect theory, time and risk preferences (including self-control, habit formation), other-regarding preferences (e.g. altruism), social image concerns (e.g. peer pressure, shame, social recognition), trust, honesty, cooperation and bargaining.

 

We will then turn to the basic tools of the trade, and cover how to formulate a testable research hypothesis, and design an experiment (or A/B test) to test it.

 

Finally, we will bring it all together and cover research papers drawn from various fields of economics that have provided new scientific insights into human behavior and the functioning of markets, while at the same time created value added for the firms and/or organizations involved in the study. Particular emphasis will be given to interventions and policies leveraging non-monetary incentives.
Description of the teaching methods
In some weeks, the class activities will be extended to include experiments, student presentations in class, and group exercises.
Feedback during the teaching period
In addition to office hours and email communications, there will be feedback activities, such as quizzes. We also aim to give constant feedback to students in the form of Q and A in the classroom. We encourage students to ask questions and participate in class discussion. Furthermore, we encourage students to form study-groups with other students to secure peer feedback on their work.
Student workload
Teaching 33 hours
Preparation / exam 173 hours
Expected literature

Most of the material covered during the course will be in the form of research papers and chapters of selected books. Below you will find a list of additional suggested readings that we might also use in the course

 

 

Acemoglu, D., Laibson, D., and List, J. (2018), Microeconomics, 2nd edition, Pearson.

 

Schultz, T. P., & Strauss, J. (Eds.). (2008). Handbook of development economics (Vol. 4). Elsevier.

 

Thaler R., Sunstein, C., (2008). Nudge: Improving decisions about health, wealth, and happiness

 

List, J., & Gneezy, U.,(2014). The why axis: hidden motives and the undiscovered economics of everyday life. 

 

Camerer, C.F., Loewenstein, G. and Rabin, M. eds. (2003). Advances in Behavioral Economics.

 

Kagel J., Roth A. (Eds.). (1995). The handbook of experimental economics, Elsevier

 

Camerer, Colin and Richard Thaler, "Anomalies: Ultimatums, Dictators and Manners." Journal of Economic Perspectives, 9, 1995, 209-219. 

 

Glaeser, Edward L., David I. Laibson, Jose A. Scheinkman and Christine L. Soutter, "Measuring Trust." QJE, 2000, 811-846. 

 

Brown, Falk, and Fehr, “Relation Contracts and the Nature of Market Interactions,” Econometrica, 2004. 

 

Bertrand Marianne, and Sendhil Mullainathan, “Are Emily and Greg More Employable than Lakisha and Jamal? A Field Experiment on Labor Market Discrimination,” AER, 2004, 94(4): 991-1013. 

 

Karlan, Dean. “Using Experimental Economics to Measure Social Capital and Predict Financial Decisions,” AER, 2005, 95(5): 1688-1699. 

 

Hamilton, Barton, J. Nickerson, and H. Owan, 2003, “Team Incentives and Worker Heterogeneity: An Empirical Analysis of the Impact of Teams on Productivity and Participation,” Journal of Political Economy 111, 465-497. 

 

 
Last updated on 04-07-2019