Behavioural Economics and the Modern Economy

This five day intensive short course will bring participants up to date with modern developments in behavioural economics.

Behavioural economics has revolutionised economics in the past thirty years by replacing the standard assumptions of perfect rationality and unbridled self-interest with more psychologically realistic alternatives. Behavioural economists believe that economists have traditionally acted as if humans are smarter and harsher than they actually are. More importantly, the departures from rationality and selfishness are systematic – the scientific goal of behavioural economics is to understand how people actually behave.

The course will draw on psychological/experimental research as well as formal behavioural economic models.

Programme benefits:

• Understand the heuristics and biases that characterise key aspects of human decision making
• Gain an overview of people's social, risk and time preferences. In particular, how a better understanding of imperfect self-control and loss aversion have revolutionised economic debates in the past decade
• Build a deeper understanding of the foundations of behavioural finance and some of the anomalies in financial markets
• Acquire knowledge to help navigate some of the new regulatory solutions that behavioural economists advocate, and also the possibilities and limits of libertarian paternalism.

Course description

This course will bring students up to date with modern developments in behavioural economics, with the aim of providing a clear statement of both behavioural economic thought and its implications for both firms and regulators. It will draw heavily on psychological and experimental research and formal economic models, and would appeal to those who have read about nudges or biases in the popular press but want a more disciplined understanding before applying it to their sector.

Key topics addressed:

• Behavioural Finance: Trade, Insurance and Risk Perceptions
• Planning over Time: Procrastination, Credit Markets, Housing, Saving and Retirement
• Limited Social Rationality: Winner's Curse, Social Learning, Defensive Medicine
• Libertarian Paternalism, Nudges.

Course outcomes

• Understand the heuristics and biases that characterise key aspects of human decision making
• Gain an overview of people's social, risk and time preferences. In particular, how a better understanding of imperfect self-control and loss aversion have revolutionised economic debates in the past decade
• Build a deeper understanding of the foundations of behavioural finance and some of the anomalies in financial markets
• Acquire knowledge to help navigate some of the new regulatory solutions that behavioural economists advocate, and also the possibilities and limits of libertarian paternalism.