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Behavioral Decision Theory

  • Lecture:

    • Wednesday, 12:00 - 13:30, Seminar room S232 (COPT)
    • Lecture starts 11.10.2017

  • Tutorial:

    • Tuesday, 17:45-19:15, Hörsaal V (Main Building)
    • Tutorial starts 12.10.2017

  • Please note that the seminar "Topics in Psychoeconomics", which is part of the Profilgruppe Psychoeconomics is offered only in the summer term (SS). 

Structure and organization: The course consists of a Lecture (taught by Johannes Buckenmaier) and a Tutorial (taught by Alexander Ritschel). The Lecture will present the basic concepts and main references. The tutorial will be used to discuss exercises and present additional references and applications.

Content:

This course presents a modern introduction to decision making and decision theory. We will discuss behavioral (experimental) evidence of decision biases and heuristics in economic frameworks, real-world examples of actual decision-making by individuals, firms, and organizations, and formal models of decision-making from both economics and psychology. The course concentrates on individual decision-making (as opposed to group decisions or strategic decision-making, i.e. games). Topics are as follows:

  1. Normative vs. Descriptive Decision Theory
  2. Expected Utility and Subjective Expected Utility
  3. Framing, the Endowment Effect, and Other Problems
  4. Decisions Under Risk and Prospect Theory
  5. Intertemporal Decisions and Quasihyperbolic Discounting
  6. Preference Reversals
  7. Ambiguity

Literature:

  • A. MAS-COLELL, M.D WHINSTON, J.R. GREEN, "Microeconomic Theory", Oxford University Press, 1995.
  • P. WAKKER, "Prospect Theory for Risk and ambiguity", Cambridge University Press, 2010. 
  • J. P. BURKETT, "Microeconomics: Optimization, Experiments, and Behavior", Oxford University Press, 2006. 
  • R.D. LUCE, H. RAIFFA, Games and Decisions, "Introduction and Critical Survey", Dover, 1990. 
  • P.C. FISHBURN, "Nonlinear Preference and Utility Theory", Baltimore, Md.: Johns Hopkins University Press, 1988. 
  • P.C. FISHBURN, "Utility Theory for Decision Making", Publications in Operations Research, No. 18. New York: John Wiley and Sons, 1970.