Academic staff

Maria Vittoria Levati, Marco Piovesan, Simone Quercia

Referent

Maria Vittoria Levati

Credits

4

Language

English

Class attendance

Free Choice

Location

VERONA

Moodle Seminars 0

Learning objectives

Starting from experimental observations and making use of tools developed in other disciplines (such as social psychology and, more recently, neuroscience), behavioral economics develops models of behavior that differ from those formulated by traditional economic theory. Its main objective is to increase the explanatory and predictive power of economic theory through the analysis of cognitive limitations and social conditioning factors that influence individual and collective decision-making processes.
The course aims to introduce students to the discipline of behavioral economics by providing an overview of the main topics that have made this field indispensable in the toolkit of an economist. In addressing these topics, the course examines both theoretical and empirical contributions, with a particular focus on the experimental method, and provides methodological tools for conducting experiments in the laboratory or in the field.

Prerequisites and basic notions

There is no mandatory requirement. Knowledge of microeconomics, game theory and basic statistics is however appreciated.

Program

The available evidence in psychology and economics suggests that individuals' behaviors deviate from the standard economic theory systematically. In this course, we will introduce the modern advances in behavioral economics and bounded rationality, including time-inconsistent preferences and self-control, judgment under risk and uncertainty, imperfect knowledge and social emotions, and show the economic implications of those psychologically richer models. Meanwhile, we aim to answer the question why individuals are "biased", and tend to find the link of some aspects of psychological regularities.
The course deals with methodological, theoretical, historical and practical aspects of experimental and behavioral economics.
Students are expected to read and discuss several papers that attempt to synthesize existing models in psychology and economics. Finally, we will present empirical papers drawn from a variety of fields (consumption, development economics, environmental economics, health economics, labor economics, political economy) as possible applications of these behavioral insights.
Throughout the course we will do our best to point out what seem to us like good directions for research in behavioral economics. In addition, as an incentive to get you started, the exam consists of analyzing a specific paper and proposing a possible extension.
MODULE 1 (Levati)
- Introduction. Methodology of Experimental Economics. What sort of knowledge social scientists can collect in the laboratory and what experiments can tell us about economic theories. Specific methods and techniques for conducting economic experiments, focusing on basic rules for reaching control in experiments. What is a field experiment: a taxonomy and a brief history.
- Social preferences, Inequity Aversion and Reciprocity (theory and experimental evidence).
MODULE 2 (Quercia):
- Risk preferences, reference dependence, prospect theory (theory and experimental evidence).
- Time preferences, time inconsistency, present bias and hyperbolic discounting (theory and experimental evidence and strategies to tackle self-control problems).
MODULE 3 (Piovesan)
- Behavioral Insights / Nudging theory and applications to environment, health, education, charitable giving, saving, discrimination.

Bibliography

Didactic methods

Frontal teaching.

Learning assessment procedures

Students have to read a recent paper on Behavioral and Experimental Economics (theoretical or empirical) suggested by us and write: 1) a "referee report" containing a short summary of the paper, a detailed analysis of the strengths and weaknesses of the paper; 2) a proposal of a possible extension of that paper.

Assessment

The evaluation will be based on the quality of the written assignment. In particular, the assessment will consider i) the clarity and accuracy of the summary of the selected paper; ii) the ability to critically evaluate the strengths and weaknesses of the paper; iii) the originality and feasibility of the proposed extension; iv) the correct use of concepts and methods from Behavioral and Experimental Economics.

Criteria for the composition of the final grade

The final grade will be based on the written assignment and on class participation.

Scheduled Lessons