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 compare 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, neuroscience and social science.

By the end of the course, students will have acquired the necessary 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 to:
- Understand the relationship between assumptions, modeling choices and expected behaviour;
- Understand the role of emotions in decision-making;
- Understand the difference between objective and perceived risks and their effect on choices;
- Understand how cognitive constraints and social preferences affect interactive behavior
- Design simple experiments

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:
- Lotteries (simple and composite);
- Expected utility;
- (Relative and absolute) risk aversion;
- Subjective and objective probabilities;
In relation to game theory, the key concepts to be known to be able to attend this course are the following:
- Strategic (normal) and extensive form games;
- Dominant Strategies;
- Nash Equilibrium;

Topics that will be presented and discussed during the course include:
- The psychological assumptions underlying expected utility
- Behavioural models of decision making under risk, with applications;
- Human behavior under ambiguity;
- Behavioural time discounting theories;
- Emotions, cognition and behaviour;
- Human sociality and other-regarding preferences; applications to incentives
- Levels of thinking and strategic behaviour;
- Learning in games;
- Neuroeconomics.

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

WRITTEN EXAM:
The final exam will contain two sections:
1. First section: problem set (10 points)
2. Second section: open questions (20 points);

Regarding grade grading (mode by which grades will be assigned), regardless of attending or non-attending mode:
A. scores in the 18-22 range will be awarded in the presence of:
- sufficient knowledge and applied comprehension skills with reference to the syllabus;
- limited ability to collect and/or interpret data, making independent judgments;
- sufficient communication skills, especially in relation to the use of specific language pertaining to the course topics;
B. scores in the 23-26 range will be awarded in the presence of:
- discrete knowledge and applied comprehension skills with reference to the syllabus;
- discrete ability to collect and/or interpret data, making independent judgments;
- fair communication skills, especially in relation to the use of specific language pertaining to the course topics;
C. scores in the 27-30 range will be awarded in the presence of:
- good or excellent knowledge and applied comprehension skills with reference to the syllabus;
- good or excellent ability to collect and/or interpret data, making independent judgments;
- fully appropriate communication skills, especially in relation to the use of specific language pertaining to the course topics.
D. honors will be awarded in the presence of knowledge and ability of applied understanding with reference to the syllabus, judgment and communication skills, excellent.

The course will feature frontal lectures and class discussions.

English

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This subject deals with topics related to the macro-area "Poverty and inequalities" and contributes to the achievement of one or more goals of U. N. Agenda for Sustainable Development