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Behavioral and Experimental
Economics
Economics 490
Spring 2012
Professor:
J. Peter Ferderer
Time
& Place:
Tueday & Thursday 9:40-11:10pm, Carnegie 305 and Humanities 302
or 304
Office
Hours: Monday
9:00-11:00am, Wednesday 1:00-2:30pm and by appointment
Course
SyllabusบPDF file กกกก
Reading List
Note: Articles/chapters
marked with "D" (for discussion) should be read before class
so students are fully prepared to participate in Q&A. Articles/chapters
marked with "P" (for material professor will lecture on)
should be read before class as well so students get more out of the
lecture, can better respond to my queries, and bring their own questions
about the readings to class. With one exception (Jan. 26), students
should read chapters from Holt after class so that their behavior
in experiments is not influenced by knowledge of what the experiments
attempt to measure.
Jan. 24 (TU) - Introduction
[1-P] Camerer,
"The Behavioral Challenge to Economics," 2003, pp. 3-24.
Jan. 26 (TH) -- Experimental
Methods (
Humanities PC Lab -- H302)
[1-D] Experiment: Bank Runs
[2-D] Holt, Chapters 1 and 2.
Individual
Decision Making
Jan. 31 (TU) -- Heuristics
and Biases
[1-D] Thaler and Sunstein, Nudge, Ch. 1.
[2-D] Tversky
and Kahneman, "Judgment under Uncertainty: Heuristics and Biases,"
Science, vol. 185, 1974.
Feb. 2 (TH) -- Discounting and Self-Control Problems
[1-P] DellaVigna,
"Psychology and Economics." JEL, June 2009, pp. 318-24.
[2-D] Thaler and Sunstein,
Nudge, Ch. 2
Feb. 7 (TU) -- Expected Utility
Theory (Humanities PC Lab -- H302)
[1-D] Experiment: Betting in Russia
[2-P] Econ
Port, "Introduction to Decision Making Under Uncertainty."
[3-D] Experiment:
Lotteries & Allies Paradox (Holt, Ch. 4 & Ch. 28)
[4-D] Experiment: Mugs and Pizza
Feb. 9 (TH) -- Prospect Theory
& Reference Dependence
[1-P] DellaVigna,
"Psychology and Economics." JEL, June 2009, pp. 324-28.
[2-D] In
Class Video: Daniel Kahneman's 2002 Nobel Prize Address.
[3-D] Camerer,
"Prospect Theory in the Wild: Evidence from the Field,"
in Choice, Values and Frames, December 1998.
Feb. 14 (TU) -- Testing Prospect Theory
[1-P] DellaVigna,
"Psychology and Economics." JEL, June 2009, pp. 328-36.
[2-S] List,
"Does Market Experience Eliminate Anomalies?" QJE, February
2003.
Feb. 16 (TH) -- Bayesian and Nonstandard Beliefs (Humanities
PC Lab -- H302)
[1-D] Experiment:
Bayes' Rule (Holt, Ch. 30)
[2-P] DellaVigna,
"Psychology and Economics." JEL, June 2009, pp. 341-47.
[3-D] Kahneman
and Thaler, "Utility Maximization and Experienced Utility,"
JEP, Winter 2006.
[4-D]
Video:
Dan Gilbert on Mistaken Expectations
[5-D] Video:
Dan Gilbert on Happiness.
Feb. 21 (TU) -- Nonstandard Decision Making
[1-P]
DellaVigna, "Psychology and Economics." JEL, June 2009,
pp. 347-60.
[2-D] Experiment:
Ellsberg's Paradox
[3-S]
Hsu,
et al., "Neural Systems Responding to Degrees of Uncertainty
in Human Decision-Making," Science, 12/9/2005.
Feb. 23 (TH) -- The Role
of Human Evolution
[1-D]
Cosmides
and Tooby, "Evolutionary Psychology: A Primer," 12/06.
[2-D] Pinker, The Blank Slate, Chapters 13 (skip 3rd section on the
soul).
[3-D] Kendrick,
et al., "Deep Rationality: The Evolutionary Economics of Decision
Making, 2008.
[4-D] Video:
Mirror Neurons
[5-D] Video: Pinker Lecture
Feb.
28 (TU) -- The Role of Human Evolution
[1-S] Chen,
et al., "How Basic Are Behavioral Biases? Evidence from Capuchin
Monkey Trading Behavior," JPE, 2006.
[2-S] Kenrick,
Neuberg, Li, "Economic Decision Biases and Fundamental Motivations:
How Mating and Self-protection Alter Loss Aversion." J. of
Personality and Social Psychology, 2011.
[3-D] Video:
Mating and Loss Aversion
[4-S] McClure,
et al., "Separate Neural Systems Value Immediate and Delayed
Monetary Rewards," Science, October 2004.
[5-S] Coates,
et al., "Second-to-Fourth Digit Ratio Predicts Success among
High- frequency Financial Traders," PNAS, January 13, 2009.
Mar. 1 (TH)
-- First Exam
Social
Preferences
Mar. 6 (TU) -- Game Theory
( Humanities Lab -- H302)
[1-D] Experiment: Matrix Games (Holt,
Ch. 3.)
[2-D] Holt
and Roth "The Nash Equilibrium: A Perspective," PNAS 2004.
[3-D] The
Matematics of Strategy, PNAS
Mar. 8 (TH) -- Fariness and
Equity (Humanities Lab -- H302)
[1-D] Experiment: Ultimatum and Dictator
Games (Holt, Ch. 12.)
[2-D] Camerer
and Thaler, "Anomalies: Ultimatums, Dictators and Manners ,"
JEP, Spring 1995.
Spring Break
Mar. 20 (TU) -- Trust and Reciprocity
(Humanities Lab -- H302)
[1-D] Experiment: Trust & Labor Market
Reciprocity (Holt, Ch. 13.)
Mar. 22 (TH) -- Public Goods
(Humanities Lab -- H302)
[1-D] Experiment: Voluntary Contributions
(Holt, Ch. 14.)
[2-D] Henrich, et al.,
"In Search of Homo Economicus: Behavioral Experiments in 15 Small-Scale
Societies," AER, May 2001.
[3-D] Levitt
and List, "What do Laboratory Experiments Measuring Social Preferences
Reveal about the Real World?" JEP, Spring 2007.
Mar. 27 (TU) -- Human Cooperation
[1-S]
Fehr and Fischbacher, "The Nature of Human Altruism," Nature,
10/23/2003.
[2-D] Bowles and Gintis, A Cooperative
Species: Human Reciprocity and Its Evolution, 2011, Chapter 5
& 12.
[3-P] DellaVigna,
"Psychology and Economics." JEL, June 2009, pp. 336-41.
Mar. 29 (TH) -- The Role of Emotions in Decision
Making
[1-D]
Pinker, The Blank Slate, Chapter 14.
[2-D] Bowles and Gintis, A Cooperative Species: Human Reciprocity
and Its Evolution, 2011, Chapter 11.
Apr. 3 (TU) -- Social Learning
(Humanities Lab -- H302)
[1-D] Surowiecki, The Wisdom of Crowds, Ch. 1 and 2.
[2-D] Video:
Scott Page on the Power of Diversity
[3-D] Experiment: Information Cascades
(Holt, Ch. 31.)
Apr.
5 (TH) -- Social Learning
[1-P] Bikhchandani,
et al.," Learning from the Behavior of Others: Conformity, Fads,
and Informational Cascades," JEP, Summer 1998
[2-D] Thaler and Sunstein, Nudge, Ch. 3.
[3-P]
Camerer and Fehr, "When Does 'Economic Man' Dominate Social Behavior?"
Science, 1/6/2006.
Apr. 10 (TU) - Second Exam
Market Responses
Apr. 12 (TH) -- Auctions (Humanities
Lab -- H302)
[1-D] Experiment: Private and Common Value
Auction (Holt,
Ch. 19-21.)
Apr. 17 (TU) -- Behavioral
Finance (Humanities Lab -- H302)
[1-D] Experiment: A Limit Order Asset Market
(Read Ch. 11 of Holt after class.)
[2-S] Shleifer,
"Are Financial Markets Efficient" in Inefficient Markets:
An Introduction to Behavioral Finance," 2000.
Apr. 19 (TH) -- Behavioral Macroeconomics
[1-D] Akerlof and Shiller, Animal Spirits, Chs. 1-8.
[2-D] Video:
Shiller on Animal Spirits I
[3-D] Video:
Shiller on Animal Spirits II
Apr. 24 (TU) -- The Economics
of Happiness
[1-D] Easterlin,
Explaining Happiness," PNAS, 2003.
[2-S] Helliwell and Barrington-Leigh,
"Measuring and Understanding Subjective Well-being?"
[3-D] Video:
The Happy Danes
Apr. 26 (TH) -- Welfare Economics
[1-D] Thaler and Sunstein, Nudge,
Introduction and 4-9.
[3-D] Video: Cass
Sunstein on Nudge
[4-D] Video: Richard
Thaler on Nudge
May 1 (TU) -- Term Paper Presentations
Behavioral
Econoimcs and The Sub-Prime Financial Crisis
Thaler
and Sunstein in the Financial Times, 11/11/2008
Peter
Bernstein, Against the Gods: The Remarkable Story of Risk,
January 2008.
Nassim
Taleb (The Black Swan) and Benoit Mandelbrot, January 2008.
Paul
Samuelson and Robert Merton on the Crisis, January 2009.
Alan
Greenspan, "I Was Wrong" November 2008.
Bird and Fortune
on the Financial Crisis.
Kahneman
and Taleb ("The Black Swan") on Risk Taking in the Financial
Crisis, 2009
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