Behavioural Economics

Behavioural economics is one of the fastest growing branches of economics and relaxes many of the assumptions of traditional economic theory.

In this course, we will consider the traditional theories and models of economics and analyse how behavioural economics begins to move away from these models, by relaxing traditional assumptions. By doing this, behavioural economics looks to explain how agents actually behave in practice and what factors can sometimes explain seemingly irrational behaviour. The course will expose students to several major topics in Behavioural Economics and will look to link theory with empirical applications.

We will analyse the role of behavioural economics in the context of both consumer and firm behaviour. In particular, the course will focus on departures from neoclassical preferences and from rational expectations.

Key Information

Level: Introductory to intermediate
Teaching: 60 hours
Expected independent study: 90 hours
Optional assessment: 2-hour examination

Typical credit: 3-4 credits (US) 7.5 ECTS points (EU) - please check with your home institution.

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This course can also be combined with our Exploring British Culture week - find out more.

Syllabus

Some of the topics that will be covered in this course include:

Strategic Thinking
Reference Dependent Preferences and Loss Aversion.
Social Preferences.
Hyperbolic Discounting.
Naiveté and Self-Control.
Happiness and Adaptation.
The role of nudging and framing and the impact on consumer behaviour.
Behavioural Welfare Analysis.
Altruism and Cooperation.
Herd Behaviour.
Non-standard beliefs (including the gamblers' fallacy)
Status and social comparison
Individual Heterogeneity and Economic Implications
Experiment Design in Practice
Neuroeconomics

Aims and Learning Outcomes

Course Aims

The aim of this course is to introduce students to the field of behavioural economics. The broad objective will be to insert more behavioural realism into economic theory and thus provide students with a better understanding of the important role that Behavioural Economics plays in explaining consumer and producer behaviour. By first ensuring an understanding of the traditional models of economics, the course will then aim to examine evidence that shows some departure from the assumptions made in the canonical economic model. We then aim to show how such departures can be formalized theoretically and how the resulting models find empirical confirmation.

By approaching behavioural economics in this way, the course aims to provide students with an understanding of the development of behavioural economics and how it builds on and then departs from traditional theory. It will consider examples such as the way in which firms can frame choices and nudge consumers to behave in a certain way. By drawing on empirical results and applying theoretical models to real-world examples, students will develop an understanding of the important lessons that this relatively new branch of economics can convey.

Learning Outcomes

By the end of the course you should be able to:

Demonstrate knowledge of some of the main theoretical and empirical debates in Behavioural Economics.
Understand the way in which Behavioural economics has developed and how we can relate it to traditional models of economics.
Assess the strengths and weaknesses of different theories of Economic Behaviour.
Demonstrate an ability to apply the main concepts to a variety of other economic fields.
Construct and substantiate arguments on a variety of topics covered in the module.
Present clearly and methodically in their own words, but also using equations and diagram

Teaching and Assessment

Course Structure

For this course, there will be 4 hours of teaching on most weekdays, comprised of lectures and small group teaching. The structure will be:

3 hours of lectures.
A 1 hour seminar in small groups.

Students will also be given time each day for independent study. Towards the end of the third week, students will also be provided with time for revision.

Due to the intensive nature of the Warwick Summer School, students are expected to attend all timetabled teaching activity, to engage with the teaching material and to spend an average of 2-3 hours per day in self-guided study.

Students registered for Warwick Summer School must attain a minimum of 75% authorised attendance of the timetabled teaching activity. If students fall short of this threshold, they will not be awarded a certificate of completion and they will not be able to sit the exam/submit final assessment. 

Authorised attendance includes any sickness absence during the course of the programme that has been properly notified and recorded. An attendance register will be taken at the beginning of teaching session so students need to ensure they arrive on time in order to be marked as attended.

Course Assessment

The module will be assessed via a 2-hour examination. It should be noted that the exam is not compulsory. Everyone who completes the course – whether or not they sit the exam - will receive a certificate of attendance.

Students who choose to sit the final exam will receive a transcript of results. The transcript of results will state the name of the student, the course studied, the exam mark and the grade. Transcripts are automatically sent to students via email by the middle of September.  You should keep this safe in case you need it for credit transfer approval or for future reference. If you would like us to email a copy of your transcript directly to someone at your University who deals with credit transfer please let us know.

The Summer School does not offer re-takes of examinations, whatever your result in the original examination. 

Entry Requirements

This course is open to students who are studying or have previously studied Economics at University level. You should attach your most recent transcript or provide a screenshot of your modules from your student portal as evidence when you apply. Students should also meet our standard entry requirements and must be aged 18 or over by the time the Summer School commences and have a good understanding of the English language.

Alumni

"The teaching staff were so friendly and willing to help. They have special and profound insights in innovative topics and conversations with other students from across the world broadened my horizons which meant I learnt more about their country and culture, giving me a global perspective."

Jay Shen (China)

Your Teachers

Lecturers

Andreas MarkoulakisLink opens in a new window

Dr Taha MovahediLink opens in a new window

Love Idahosa

Reading List

Below are some illustrative readings for this course.

D. Kahneman and A. Tversky; “Choices, Values, and Frames”; (2000); Cambridge University Press: Cambridge.
C. Camerer, G. Loewenstein and M. Rabin; “Advances in Behavioural Economics”; ed. Camerer, Loewenstein and Rabin; (2004).
F. Shane, G. Loewenstein and T. O'Donoghue; “Time Discounting and Time Preference: A Critical Review”; Journal of Economic Literature; Jun., (2002), Vol. 40, No. 2. pp. 351-401
A. Clark, E. P. Frijters and M. A. Shields “Relative Income, Happiness, and Utility: An Explanation for the Easterlin Paradox and Other Puzzles”; Journal of Economic Literature; (2008), 46:1, 95–144
D. G. Blanchflower and A. J. Oswald; “Well-Being over Time in Britain and the USA”; Journal of Public Economics; (2004) 88(7–8): 1359–86.
E. Proto and A. Rustichini; "A reassessment of the Relation Between GDP and Life Satisfaction"; PLOS ONE; November, 2013.
A. Oswald, E. Proto and D. Sgroi; “Happiness and Productivity”; Journal of Labour Economics; (2013); Forthcoming.

Please note changes to the syllabus and teaching team may be made over the coming months before exact set of topics are finalised.

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