• Understand what behavioral biases are and how they may affect people’s decisions.
• Understand what monetary and non-monetary incentives are, and how they may affect people’s economic decisions.
• Understand how different types of behavioral constraints affect people’s economic decisions, including psychological biases.
• Ability to formulate testable research hypotheses.
• Ability to identify ways to test hypotheses using experiments or existing data.
• Ability to communicate scientific results.

Economics studies how people allocate scarce resources among competing needs.  But what are those competing needs, and exactly what resources are scarce? 

Neoclassical economic models typically assumes that people seek to maximize their own wealth, that they are only constrained in the amount of money and time they have, and that they can make the best use of what they know: useful information is always taken into account, irrelevant information is ignored, the way problems are framed does not affect decisions, and neither do the circumstances in which decisions are taken. This does not mean that people do not make mistakes, but that those mistakes are assumed to not be systematic. 

Behavioral economics uses the same theoretical and empirical approaches but relaxes these assumptions about human behavior. First, people care about money, but also care about other things: the wellbeing of others, the wellbeing of the planet, their social reputation and social standing, their self-esteem, their values, among others. Second, money and time are not the only scarce resource: people often suffer from limited attention, willpower, time inconsistency, limited experience and information, and often have incorrect beliefs about the world. Third, people tend to make mistakes in systematic ways, they often ignore relevant information, they make decisions that depend on how the problem is framed, and often are influenced by their emotions. Behavioral economics provide tools to model and test how people make decisions in real life. 

Understanding what influences people’s economic decisions is crucial for policy making, as well as for the private sector. 

This is why 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.  

This course aims at providing students with a hands-on introduction to the tools necessary to apply evidence-based decision-making within firms, non-profit organizations and public institutions.   The goal is not only to enable students to become consumers of the empirical literature on behavioral and experimental economics, but also active producers 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 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 review empirical work showing how people respond to different types of incentives, and what psychological biases consistently affect people’s decisions. 

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. 

This is a 3 weeks course.

Preliminary assignment: The course coordinator uploads Preliminary Assignment on Canvas at the end of May. It is expected that students participate as it will be included in the final exam, but the assignment is without independent assessment and grading.

We reserve the right to cancel the course if we do not get enough applications. This will be communicated on https://www.cbs.dk/uddannelse/international-summer-university-programme-isup/courses-and-exams in start March.

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, 2^nd 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