2024/2025 KAN-CPHIO2002U Behavioural Economics
English Title | |
Behavioural Economics |
Course information |
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Language | English |
Course ECTS | 7.5 ECTS |
Type | Mandatory (also offered as elective) |
Level | Full Degree Master |
Duration | One Quarter |
Start time of the course | Third Quarter |
Timetable | Course schedule will be posted at calendar.cbs.dk |
Study board |
Study Board for BSc/MSc in Business Administration and
Philosophy, MSc
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Course coordinator | |
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Main academic disciplines | |
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Teaching methods | |
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Last updated on 12-02-2024 |
Relevant links |
Learning objectives | ||||||||||||||||||||||
To achieve the grade 12, students should meet the
following learning objectives with no or only minor mistakes or
errors:
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Examination | ||||||||||||||||||||||
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Course content, structure and pedagogical approach | ||||||||||||||||||||||
This course provides students with a critical view on economics, and its standard models and assumptions based on what we know about personal and market behavior. It is an introduction to a critique that takes as its premise that decision-making and behavior are not necessarily driven by rational considerations but by aspects of psychology.
Purpose
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Description of the teaching methods | ||||||||||||||||||||||
This course begins by reviewing the standard
economic assumptions related to preferences and expected utility –
to make sense of how psychology impacts individuals and markets it
is necessary to take this step back –, its inability to account for
various paradoxes and anomalies, and the genesis of behavioral
economics. Philosophical themes covered in this part include
rationality, utilitarianism (ethics), and empiricism
(epistemology).
These central theoretical developments have subsequently proved incomplete as individuals’ actual choices violate a number of important assumptions. For example, the assumption of risk aversion proved to be poorly grounded in actual behavior as did market efficiency. (Social) Psychology provided interesting alternative explanations that naturally call for philosophical scrutiny: Prospect theory, heuristics and biases, mental accounting, overconfidence, and nudging (paternalism). Philosophical themes include fairness, emotions, and inter-temporal choice. The final part of the course describes how psychological biases have the potential to impact the behavior of managers in practice. Both the abilities of rational managers to take action when markets are believed to reflect irrationality and the possibility that managers are themselves the source of bias are addressed. Here, the philosophical purpose is to abstract what is valid from all realms. Some 'debiasing' strategies will also be covered. Lastly, Experimental research occurs several times throughout the course, as a method to investigate behavior with respect to the topics of this course and as a topic in and of itself. The idea is to give students the relevant methodological knowledge to conduct behavioral research during their studies as well as in their professional work. |
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Feedback during the teaching period | ||||||||||||||||||||||
Feedback is, in part, provided on an ongoing
basis through Q&A during the lectures. This includes a
dedicated Q&A session for exam preparation. Moreover, feedback
is provided on the group work and experimental exercises that we do
in class. Finally, students are encouraged to make use of office
hours.
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Student workload | ||||||||||||||||||||||
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Expected literature | ||||||||||||||||||||||
Indicative literature (incomplete):
Bruni, L. and R. Sugden (2007). The road not taken: How psychology was removed from economics, and how it might be brought back. The Economic Journal, 117, 146-173. Gigerenzer, G. and W. Gaissmaier (2011). Heuristic decision making. Annual review of psychology, 62, 451-482. Kahneman, D. (2011). Thinking, fast and slow. Macmillan. Kahneman, D. and A. Tversky (1979). Prospect theory: An analysis of decision under risk. Econometrica, 47, 263-291. Simon, H. A. (1987). Making management decisions: The role of intuition and emotion. The Academy of Management Executive, 1, 57-64. Thaler, R. H. and C. R. Sunstein (2003). Libertarian paternalism. American Economic Review, 93, 175-179. Tversky, A. and D. Kahneman (1974). Judgment under uncertainty: Heuristics and biases. Science, 185, 1124-1131. Zuboff, S. (2019). The age of surveillance capitalism: The fight for the human future at the new frontier of power. Profile Books. |