BEHAVIOURAL ECONOMICS

This course will introduce the most relevant conceptual, modelling, experimental and empirical aspects of recent research from the field of behavioural economics.
We will confront behavioural theories with their neoclassical counterparts, which students have extensively explored and studied during microeconomics courses. In particular, in relation to the main differences in their assumptions, modelling choices, and, their implications on predicted behaviour.
Major empirically and experimentally observed violations of expected utility theory will be extensively described and discussed.
We will explore most promising modelling solutions proposed by behavioural studies, both in relation to decision making in isolation and in strategic interaction settings.
Students will also have the chance to see in which terms behavioural theories are based on modelling assumptions inspired by findings from psychology, neurology and other social sciences.

By the end of the course, students will have acquired the tools to describe, understand and model the dynamics behind individual decision-making, as well as decision-making in contexts of strategic interaction.
As far as knowledge and understanding skills are concerned, students will be able:
- Understand the relationship between assumptions, modeling choices and expected behaviour;
- Understand how economic models are inspired or based on the results and discoveries of other disciplines;
- Understand the role of emotions in decision-making;
- Understand the difference between objective and perceived risks and their effect on choices;
- Understanding the causes and effects of uncertainty in individual and collective choices;
- Understanding the phenomena of social amplification of uncertainty and perceived risks;

Students must know the basic notions and principles of expected utility theory and game theory. I
In relation to expected utility theory, the key concepts/notions to be known to be able to follow this course are the following:
- (Relative and absolute) risk aversion;
- Lotteries (simple and composite);
- Expected utility maximization;
- Certainty equivalent;
- Subjective and objective probabilities;
In relation to game theory, the key concepts to be known to be able to follow this course are the following:
- Strategic (normal) and extensive form games;
- Dominant Strategies;
- Nash Equilibrium;

Topics that will be exposed and discussed during the lectures include:
- Behavioural models of decision making under risk;
- Human sociality and other-regarding preferences;
- Behavioural time discounting theories;
- Levels of thinking and strategic behaviour;
- Reinforcement learning and belief-based learning;
- Emotions, cognition and behaviour;
- Bounded rationality in financial markets;
- Neuroeconomics;
In relation to the aforementioned classical topics of behavioural economics literature, we will analyse and discuss in-depth the following issues:
- Risk and uncertainty perception and social amplification;-
- On the role of beliefs of causation and association in mental models and expectations formation;
These two topics will be discussed with students both in class and at (research group + professor) meetings, during the weekly office hours.

The reference book for this course is:
– Sanjit Dhami (2016). ”The Foundations of Behavioral Economic Analysis”, Oxford University Press;

Here follows the list of the sections of the reference book that should be studied for the final exam:
Part 1 - Behavioural Economics of Risk, Uncertainty and Ambiguity (82 pages):
– Chapter 1 sections: 1.1, 1.2, 1.3, 1.5.1, 1.5.2, 1.5.4, 1.5.5, 1.5.6 (20 pages);
– Chapter 2 sections: 2.1, 2.2, 2.3, 2.4, 2.10.1, 2.10.4, 2.11[only intro, 2.11.1 and 2.11.2] (40 pages);
– Chapter 3 sections: 3.1, 3.2[only intro and 3.2.1](9 pages);
– Chapter 4 sections: 4.1, 4.2, 4.4 (13 pages);
Part 2 - Other Regarding Preferences (40 pages):
– Chapter 6 sections: 6.1, 6.2[only intro], 6.3, 6.7.1, 6.7.2 (23 pages);
– Chapter 7 sections: 7.1, 7.2.1, 7.3[excluding 7.3.2] (17 pages);
Part 3 - Behavioural Time Discounting (27 pages):
– Chapter 9 sections: 9.1, 9.2, 9.3[only intro and 9.3.1], 9.4[only intro, 9.4.1 and 9.4.3] (8 pages);
– Chapter 10 sections: 10.1, 10.2.1, 10.3.1, 10.4.1, 10.4.2, 10.5[only intro, 10.5.1 10.5.2] (19 pages);
Part 4 - Behavioural Game Theory (25 pages):
– Chapter 13 sections: 13.3[only intro, 13.3.1 and 13.3.2], 13.4.5, 13.5[only intro and 13.5.1], 13.6 (25 pages);
Part 5 - Behavioural Models of Learning (22 pages):
– Chapter 15 sections: 15.2[only intro, 15.2.1, 15.2.4 and 15.2.5], 15.3[only intro and 15.3.1], 15.9 (22 pages);
Part 6 - Emotions (34 pages):
– Chapter 17 sections: 17.1, 17.2, 17.4, 17.5[only intro and 17.5.1], 17.6[only intro, 17.6.1 and 17.6.4] (19 pages);
– Chapter 18 sections: 18.1, 18.2, 18.5[only intro and 18.5.1](15 pages);
Part 7 - Bounded Rationality (71 pages):
– Chapter 19 sections: 19.2[only intro and 19.2.1],19.3[only intro], 19.4, 19.5[only intro, 19.5.1, 19.5.2], 19.6[only intro
and 19.6.1], 19.7[only intro and 19.7.1], 19.9[only intro and 19.9.1], 19.10[only intro, 19.10.1 and 19.10.2], 19.12, 19.13,
19.17[only intro and 19.17.1], 19.18 (34 pages);
– Chapter 20 sections: 20.1[only intro and 20.1.1], 20.2, 20.3 (15 pages);
– Chapter 21 sections: 21.1, 21.2, 21.5 (22 pages);
Part 9 - Neuroeconomics (25 pages):
– Chapter 23 sections: 23.2, 23.4[excluding 23.4.4], 23.5[only intro, 23.5.1 and 23.5.2], 23.6, 23.7(25 pages);
Slides associated with the lectures will be posted on Moodle (the course e-learning platform) before the lecture in which they
will be used;
Other suggested readings and materials will be made available in electronic format via the Moodle platform;

FOR ATTENDING STUDENTS (those participating to at least 80% of the total number of lectures), the final grade is based on:
- A reduced version of the written exam (50% = 15 points);
- One homework set (25% = 7.5 points);
- In-class presentation of your group project (25% = 7.5 points);
In addition, your insightful contributions to the discussions in class will enter into your grade through a bonus (up to 3 points);

FOR DISTANCE LEARNING STUDENTS (those participating to less than 80% of the total number of lectures), the grade will be based on:
- The complete version of the written exam (100% = 30 points);

WRITTEN EXAM:
The final exam will contain two sections:
1. First section: problem set (15 points)
2. Second section: open questions (15 points);
Distant learning students will have 1 hour and 45 minutes to complete both sections of the final exam;
Attending students will have to choose one of the two sections and will have 60 minutes to complete the selected section
of the final exam;

The course will feature face-to-face lectures and class discussions. Attending students will have to design, implement and present a group-research project related to risk/uncertainty perception or on causation/association beliefs (and their effects on expectations). Projects enquiry and/or hypothesis testing strategy should be based on empirical data sourced from the web. The teacher will guide students in the process of defining group research topics and investigation methods.

English

Accessibility, Disability and Inclusion
Accommodation and support services for students with disabilities and students with specific learning impairments

Ca’ Foscari abides by Italian Law (Law 17/1999; Law 170/2010) regarding support services and accommodation available to students with disabilities. This includes students with
mobility, visual, hearing and other disabilities (Law 17/1999), and specific learning impairments (Law 170/2010). If you have a disability or impairment that requires accommodations (i.e., alternate testing, readers, note takers or interpreters) please contact the Disability and Accessibility Offices in Student Services: disabilita@unive.it.

written and oral