Behavioral Economics

Class Description

Economics Meets Reality: An Introduction to Behavioral Economics Why do we sometimes fail to act in our own best interests? Traditional economic models assume that people make decisions in a “rational” manner. However, as humans, our way of thinking is often subject to several biases. For example, we often sign up for “free” magazines that usually require automatic renewal and end up paying for them year after year because we fail to go back and revisit that decision (“status quo bias”). Workers often fail to save for the future because they underweight the future. Even worse, some fail to sign up for employer retirement plans, even though the employer offers to match employee savings up to 6 percent (“present bias”). We all fall for a “deal too good to pass up,” often because the retailer manipulates the “normal, everyday” price (“anchoring bias”). This course provides an introduction to a relatively new field—Behavioral Economics – that draws on the fields of economics, psychology, sociology, and neuroscience, to provide a better explanation of what influences the choices we make. It examines how governments and companies all over the world are using behavioral insights to design their policies and improve our well-being (or profits!), the extent to which these have been successful in their goal, and the ethical and social concerns that have surfaced regarding such efforts. A class packet of readings will be available the first day of class. I will send an email to registered participants as soon as I have an estimate on how much the packet will cost. Mondays, 10:30 - 12:00 In Person: B4 Class Limit: 25