Introduction to Experimental Economics

Indicative content

COURSE OUTLINE
The course provides an introduction to behavioral and experimental economics, focusing on key concepts, methods, and applications in various areas of economics. Students will learn about decision-making theories, psychological biases, strategic interactions, and applications of behavioral economics in finance, labor markets, and public policy.
1. Introduction to Behavioral and Experimental Economics (Cartwright, 2018)
Definition and historical development of behavioral and experimental economics
Departure from neoclassical assumptions of rational agents
Key methods in behavioral economics: laboratory and field experiments
Landmark experimental studies and their contributions to economic knowledge
Differences between behavioral and experimental economics
2. Judgments and Heuristics (Kahneman, 2011)
Heuristics: definition and function in decision-making
Examples of heuristics: availability heuristic, anchoring, representativeness
Systematic errors in judgment and decision-making
Experiments demonstrating the impact of heuristics
Implications for economics and public policy
3. Decision-Making and Preferences (Cartwright, 2018)
Rational and irrational decision-making
Prospect Theory (Kahneman & Tversky, 1979)
Losses versus gains: effect of asymmetric evaluation
Intertemporal decision-making and time inconsistency (hyperbolic discounting)
Experimental testing of decision-making theories
4. Biases in Decision-Making (Kahneman, 2011)
Cognitive biases and their classification
Biases: confirmation bias, hindsight bias, status quo bias
Experimental evidence of biases in economic decision-making
Implications of biases for markets and economic policies
5. Noise and Uncertainty in Decision-Making (Kahneman, 2021)
Difference between noise and bias
Variability in judgments and its economic consequences
How noise affects decision-making in business and public policy
Methods for reducing noise in decision-making processes
6. Strategic Interactions (Camerer, 2011)
Introduction to game theory: basic concepts
Nash equilibrium and its applications in economics
Coordination games and dilemmas (Prisoner’s Dilemma, public goods)
Experimental testing of strategic games
Behavioral aspects of strategic interaction
7. Analytical Game Theory (Camerer, 2011)
Rationality and equilibrium strategies
Dynamic games and games with incomplete information
Principles of solving games in economics and business
Experimental verification of assumptions in analytical game theory
8. Behavioral Game Theory (Camerer, 2011)
Differences between standard and behavioral game theory
Bounded rationality and social preferences (altruism, reciprocity)
Experiments on trust, fairness, and cooperation
Use of behavioral game theory in market and policy design
9. Behavioral Labor Economics (Charness & Kuhn, 2011)
Motivation and employee behavior: theory vs. reality
Experiments on labor supply and compensation
Impact of social norms and fairness on performance
Behavioral insights in HR management and organizational behavior
10. Behavioral Finance (Cartwright, 2018)
How psychology influences financial decision-making
Emotions, risk aversion, and framing effects in investment decisions
Behavioral explanations of market bubbles
Experimental studies on irrational investor behavior
11. Behavioral Economics of Well-Being (Sunstein, 2020)
Nudge theory and the concept of “libertarian paternalism” (Thaler & Sunstein, 2008)
Measuring subjective well-being: limits and challenges
Policies based on behavioral economics (social policy, healthcare)
Ethical issues of behavioral interventions