Macalester College

Behavioral and Experimental Economics
Economics 490
Spring 2008

Professor: Pete Ferderer

Time & Place: Tueday& Thursday 10:10-11:40, Carnegie 305

Office Hours: Monday 8:30-10:00 a.m., Wednesday 1:00-2:30 p.m. and by appointment

Course Syllabus：PDF file      　　

 
General Introductions

"The Market Place of Perceptions," Harvard Magazine, 2006


Tentative Reading List                                                                             

Jan. 29 (TU)             - Introduction

[1-P] Camerer, "The Behavioral Challenge to Economics," 2003, pp. 3-24.
[2-P] Kopke, Little and Tootell, "How Humans Behave: Implications for Economics and Economic Policy," New England Economic Review, 2004, pp. 3-14.
[3-P] Gigerenzer and Sleten, "Rethinking Rationality" in Bonded Rationality: The Adaptive Toolbox, 2002, pp. 1-12.

Jan. 31 (TH) -- Experimental Methods (Meet in Humanities 302)
[1-D] Friedman & Sunder, Experimental Economics: A Primer for Economists, Ch. 3-4.
[2-D] Roth, "Let's Keep the Con out of Experimental Economics: A Methodological Note."
[3-D] Vecon Lab Experiment: A Pit Market
[4-D] Holt, Chapters 1 and 2.

Feb. 5 (TU) -- The Human Mind
[1-D] Pinker, The Blank Slate, Chapters 13 (skip 3rd section on the soul) and 14.
[2-D] Video: Pinker Lecture
[3-D] The Economist, "A Concrete Savannah," 12/20/2005.
[4-D] The Economist, "A Survey of the Brain," 12/23/2006.
[5-D] Mirror Neurons

Individual Decision Making

Feb. 7 (TH) -- Heuristics and Biases
[1-D] Tversky and Kahneman, "Judgment under Uncertainty: Heuristics and Biases," Science, vol. 185, 1974.
[2-P] Montier, "Behaving Badly," 2/2/2006.
[3-D] Richard Thaler on Baseball, 10/23/2003.

Feb. 12 (TU) -- Rational Choice
[1-D] ASBS, "Rational Choice"
[2-D] Kahneman and Thaler, "Anomalies: Utility Maximization and Experienced Utility," JEP, Winter 2006.
[3-D] Experiments on preferences (mugs and pens).
[4-D] Daniel Kahneman's 2002 Nobel Prize Address.

Feb. 14 (TH) -- Rational Choice
[1-D] Kahneman, Knetsch & Thaler, "Anomalies: The Endowment Effect, Loss Aversion, and Status Quo Bias," JEP, Winter 1991.
[2-S] Harbaugh, Krause and Berry, "GARP for Kids: On the Development of Rational Choice Behavior," AER, December 2001.
[S-3] List, "Does Market Experience Eliminate Anomalies?" QJE, February 2003.

Feb. 19 (TU) -- Choice under Uncertainty (Humanities Computer Lab)
[1-D] Vecon Lab Experiments: Risk and Decision Making & Lottery Choice Anomalies
[2-D] Holt, Chapters 4 and 28. (Read AFTER class).

Feb. 21 (TH) -- Choice under Uncertainty
[1-P] Tversky and Kahneman, "The Framing of Decisions and the Psychology of Choice," Science, 1/30/1981.
[2-D] Camerer, "Prospect Theory in the Wild: Evidence from the Field," in Choice, Values and Frames, December 1998.
[3-S] Chen, et al., "How Basic Are Behavioral Biases? Evidence from Capuchin Monkey Trading Behavior," JPE, 2006.

Feb. 26 (TU) -- Intertemporal Choice
[1-P] Frederick, et al.,"Time Discounting and Time Preference: A Critical Review," (first 20 pages) JEL, 2000.
[2-S] McClure, et al., "Separate Neural Systems Value Immediate and Delayed Monetary Rewards," Science, October 2004.
[1-D] Poldrack Audio.

Social Preferences and Learning

Feb. 28 (TH) -- Game Theory (Humanities Computer Lab)
[1-D] Roth, "Game Theory as a Part of Empirical Economics."
[2-D] Holt and Roth "The Nash Equilibrium: A Perspective," PNAS 2004.
[3-D] Vecon Lab Experiment: Prisoner's Dilemma & Coordination Games
[4-D] Holt, Chapter 3. (Read AFTER class)

Mar. 4 (TU) -- Fairness and Equity (Humanities Computer Lab)
[1-D] Vecon Lab Experiment: Ultimatum Games
[2-D] Holt, Chapter 12. (Read AFTER class)

Mar. 6 (TH) -- Trust and Reciprocity (Humanities Computer Lab)
[1-D] Camerer and Thaler, "Anomalies: Ultimatums, Dictators and Manners ," JEP, Spring 1995.
[2-D] Vecon Lab Experiment: Trust & Labor Market Reciprocity Games
[3-D] Holt, Chapter 13 (Read AFTER class)

Mar. 11 (TU) -- Altruism and Social Norms (Humanities Computer Lab)
[1-D] Vecon Lab Experiment: Voluntary Contributions
[2-D] Holt, Chapter 14. (Read AFTER class)
[3-S] Video: Wright, "How Cooperation (Eventually) Trumps Conflict," February 2006.

Mar. 13 (TH) -- The Big Picture
[1-P] Fehr and Fischbacher, "The Nature of Human Altruism," Nature, 10/23/2003.
[2-S] Camerer and Fehr, "When Does 'Economic Man' Dominate Social Behavior?" Science, 1/6/2006.
[3-S] Gintis, et al., "Explaining Altruistic Behavior in Humans," EHB, 2003.
[4-D] Levitt and List, "What do Laboratory Experiments Measuring Social Preferences Reveal about the Real World?" JEP, Spring 2007.

Spring Break

Mar. 25 (TU) -- Bayesian Inference (Humanities Computer Lab)
[1-D] Vecon Lab Experiments Bayes' Rule & Information Cascades
[2-D] Holt, Chapters 30 and 31 (Read AFTER class)

Mar. 27 (TH) -- Herding (Humanities Computer Lab)
[1-D] Audio: Surowiecki's Wisdom of Crowds
[2-D] "Who Wants to be a Millionaire?"
[3-D] Bikhchandani, et al.," Learning from the Behavior of Others: Conformity, Fads, and Informational Cascades," JEP, Summer 1998.
[4-D] Surowiecki, "Monkey See, Monkey Do," in The Wisdom of Crowds, 2004.

Apr. 1 (TU) -- Student Presentations: Research Proposals

Market Behavior

Apr. 3 (TH) -- Private Value Auctions (Humanities Computer Lab)
[1-D] Vecon Lab Experiment: Private Value Auction Game
[2-D] Holt, Chapter 19. (Read AFTER class)
[3-D] Alvin Roth Discusses, "Market Failure and Market Design." October 2007.

Apr. 8 (TU) -- Asymmetric Information and Common Value Auctions (Humanities 304 -- Mac lab)
[1-D] Vecon Lab Experiment: Common Value Auction Game
[2-D] Holt, Chapters 20 & 21. (Read AFTER class)

Apr. 10 (TH) -- Asset Market Bubbles (Humanities 302 -- PC Lab)
[1-D] Vecon Lab Experiment: A Limit Order Asset Market
[2-D] Holt, Chapter 11. (Read AFTER class)

Apr. 15 (TU) -- Asset Market Bubbles in History
[1-D] Shiller, Irrational Exuberance, Chs. 7, 5 and 4.
[2-D] Video: Shiller and Siegel on PBS

The Impact of Behavioral Insights

Apr. 17 (TH) -- Finance
[1-P] Thaler, "The End of Behavioral Finance," Financial Analyst Journal, Nov/Dec., 1999.
[2-S] Shleifer, "Noise Trader Risk in Financial Markets" in Inefficient Markets: An Introduction to Behavioral Finance," 2000.
[3-D] Video: Laibson on diversification, 2/28/202.
[4-S] Benartzi and Thaler, "Myopic Loss-Aversion and the Equity Premium Puzzle," QJE, February 1995.

Apr. 22 (TU) -- Economic Development
[1-S] Mullainathan, "Development Economics through the Lens of Psychology,"
[2-P] Ferderer, "Advances in Communication Technology and Growth of the American Over-the-Counter Markets, 1876-1929.
[3-D] "The Avuncular State," The Economist, April 6, 2006.

Apr. 24 (TH) -- Macroeconomics
[1-D] Video: Akerlof's Nobel Lecture
[2-P] Akerlof, "The Missing Motivation in Macroeconomics," November 15, 2006.
[3-S] Knack and Keefer, "Does Social Capital Have an Economic Payoff: A Cross-country Investigation," QJE, November 1997.
[4-S] Bewley, T. "Why Not Cut Pay?" European Economic Review, 1998, pp.459-90.

Apr. 29 (TU) -- The Economics of Happiness
[1-D] Graham, "The Economics of Happiness,"
[2-S] Blanchflower and Oswald, "Money, Sex and Happiness: An Empirical Study," NBER WP No. 10499, May 2004.
[3-D] Audio: Graham and Blanchflower Interview
[4-D] Video: Dan Gilbert on Happiness.
[5-D] Video: Barry Schwartz on the Paradox of Choice.
[6-D] Video: Malcom Gladwell on Happiness and Choice.

May 1 (TH) Student Presentations

May 6 (TU) Student Presentations