EC5217 - Behavioural Economics for Sustainable Policy

Economists (and their models) typically assume that people act rationally, which is a contentious assumption. This subject demonstrates persistent irrational human behaviour (for example cognitive dissonance, procrastination and norm adherence), pointing at failure of rational models. The subject then presents alternative models, which accept irrationality and have more predictive power. The subject provides relevant skills to students in economics and more broadly to students with an interest in psychology or who wish to understand how to nudge human behaviour in a desired direction.

Learning Outcomes

• critically evaluate empirical shortcomings of rational economic models regarding intertemporal choices and social preferences and how behavioural models can do better;
• research and investigate how humans make choices, form beliefs and deal with risk and uncertainty and appraise how this may deviate from the assumptions of rational economic models;
• design and conduct, showing creativity and initiative, an experiment for which behavioural and rational models predict opposing outcomes, and differentiate which of the two models more accurately predicts human behaviour in a chosen setting.

Subject Assessment

• Written > Test/Quiz 1 - (30%) - Individual
• Written > Research report - (40%) - Individual
• Oral > Interview - (30%) - Group.

Note: Minor variations might occur due to the continuous Subject quality improvement process, and in case of minor variation(s) in assessment details, the Subject Outline represents the latest official information.