Behavioral economics integrates insights from
psychology into economics. Going beyond the bounds of rationality and
self-interest of economic agents, behavioral economics is concerned with the
effects of psychological, social, and cognitive factors on the decisions of
individuals and groups. In the lectures, we will look at the most important
cognitive biases as well as their causes and consequences. The students will
learn how people behave under uncertainty, how they make predictions for the
future, how they remember and evaluate the past, if they make consistent
decisions over time, and what makes them happy. They will also learn how people
perceive themselves, why they have self-control problems, when they feel
regret, why default rules have a big impact on human behavior, what is
perceived as fair, and how the desire for fairness affects behavior. We will
look at many examples from different areas of life, such as sports like
football, marathon, golf, or baseball, playing Roulette in a casino, job
interviews, organ donations, Facebook ads, the real estate market, the prices
of taxis, or the ‘Black Lives Matter’ movement. We will watch some videos and
see that cognitive biases are often very pronounced in young children, but
don't completely disappear in adults. We will also play games in the classroom
and compare the results with the results of research studies in psychology and
behavioral economics. We will address questions such as: Why do people sign
long-term contracts with a gym and then do not go? Is it a good strategy for a football
club to fire the coach in case of failure? Does money make us happy? The goal
of the course is to provide an overview of the key insights of behavioral
economics in an entertaining and hopefully lasting way and to help the students
to understand human behavior in its complexity.