Behavioural Economics and Exp. Design

Faculteit Economie en Bedrijfskunde
Jaar 2017/18
Vakcode EBM174A05
Vaknaam Behavioural Economics and Exp. Design
Niveau(s) master
Voertaal Engels
Periode semester II b
Rooster rooster

Uitgebreide vaknaam Behavioural Economics and Experimental Design
Leerdoelen Upon completion of the course the student is able to:
1. Explain the differences between rational-choice theory and behavioral economics.
2. Describe the main experimental results that support the behavioral view of human decision-making.
3. Qualitatively and quantitatively apply advanced models of prospect theory, hyperbolic discounting, stochastic reference points, fairness and reciprocity.
4. Critically evaluate international journal articles about the implications of behavioral economics
5. Categorize field experiments and explain how they are different from, and complement lab experiments
6. Explain why and when randomized evaluations are useful
7. Present the main ideas, methodology and findings of an existing experimental study in a coherent, comprehensive and concise way.
8. Formulate research hypotheses that can be tested with an experimental design.
9. Explain advantages and disadvantages of alternative risk, time and social preference games.
10. Explain savings behavior using alternative behavioral economics theories
Omschrijving This course consists of two parts:
1. Behavioral Economics (BE);
2. Experimental Design (ED).

The goal of the BE part of the course is to gain understanding on how non-standard preferences affect economic decision making and to gauge the importance non-standard preferences in determining behavior in various economic contexts. Taking the survey article by DellaVigna (2009) as our point of departure, we will subsequently study models of reference-dependent preferences, non-standard time preferences and social preferences and consider the empirical evidence.

Upon completion of the BE part, you will understand the working of the major models of non-standard preferences, such as prospect theory, the beta-delta model of quasi-hyperbolic discounting, intentions-based models and models of fairness and social preferences and of inequity aversion. You will be able to quantitatively and qualitatively assess the implications of these models on individual decision-making and on economic outcomes and be in a position to critically evaluate international journal articles about (the implications of) behavioral economics.

In the ED part of the course, you will learn about the different categories of field experiments and how they are different from, and complement lab experiments. You will learn the value of properly organized randomized control trials (RCTs) for impact evaluation. A number of case studies in development economics receive an in-depth treatment. The studies are selected such that you learn how experimental research furthers the debate regarding how and to which extent behavioral insights should be incorporated into economic theory.
By studying a number of empirical papers and preparing a presentation of one of these, you will gain an understanding of the critical elements and the pitfalls in designing and conducting lab and field experimental studies.

Students who are serious in studying these topics (which should include anyone wanting to do a PhD in economics, econometrics or finance) are highly advised to take the courses Game Theory and Oligopoly (ReMa), Advanced Industrial Organization (MSc EORAS), Corporate Finance (ReMa) and Development Economics (ReMa) as electives. The first gives a much more complete introduction in game theory. The second studies further issues in Industrial Organization. The third applies game theory to problems in finance. The latter focuses on Economics of Development, which complements the ED part of this course.
Uren per week
Onderwijsvorm gecombineerde hoor-/werkcolleges
(combined lecture/tutorial)
(Assignment(s), presentation and final written exam with open questions)
Vaksoort master
Coördinator prof. dr. A.R. Soetevent
Docent(en) prof. dr. B.W. Lensink
Entreevoorwaarden The course is aimed at research master students. Students are assumed to have taken the ReMa course Microeconomic Analysis or an equivalent course. It is recommended to take the ReMa course Game Theory and Oligopoly prior to this course. As part of this course explicitly focuses on experiments in developing countries, the course is also of interest for research masters students focusing on development economics.
Opgenomen in
Opleiding Jaar Periode Type
Research Master in Economics and Business  (Economics) 1 semester II b keuzegroep
Research Master in Economics and Business  (keuzevakken ReMa-Economics) 1 semester II b keuze