Instructional goals
This course provides an introduction to behavioral economics, aiming to develop a solid understanding of: the psychological factors that influence individual decision-making processes; how these factors can be leveraged to design business strategies and public policies in areas such as health, energy, taxation, and more. The course is structured into two modules. Module 1 presents the conceptual foundations of behavioral economics and contrasts them with traditional microeconomic theory. Topics include prospect theory, loss aversion, heuristics, and cognitive biases that affect decisions. Module 2 focuses on how individuals process new information, the role of biases and altruism, strategic interactions, and the application of nudges.
Prerequisites
Basic knowledge of microeconomics and statistics
Intended learning outcomes
Al termine del corso, gli studenti saranno in grado di:
Comprendere i principali modelli e risultati dell'economia comportamentale e le loro differenze rispetto alla teoria economica tradizionale.
Identificare i fattori psicologici e sociali che influenzano le decisioni individuali.
Applicare i concetti dell'economia comportamentale all'analisi di problemi aziendali e di policy in diversi ambiti, tra cui salute, energia e fiscalità.
Valutare criticamente l'efficacia e le implicazioni etiche di interventi comportamentali e strategie di nudging.
Course Contents
Il corso si articola in due moduli. Il Modulo 1 introduce i fondamenti teorici dell'economia comportamentale, mettendoli a confronto con i principi della teoria microeconomica tradizionale. Tra i temi affrontati figurano la Prospect Theory, l'avversione alle perdite (loss aversion), le euristiche e i principali bias cognitivi che influenzano i processi decisionali.
Il Modulo 2 approfondisce il ruolo dell'acquisizione e dell'elaborazione delle informazioni, le distorsioni cognitive, le preferenze sociali, l'altruismo, le interazioni strategiche e l'utilizzo dei nudge come strumenti per orientare i comportamenti individuali.
Reference Books
Edward Cartwright (2018), Behavioral Economics, terza edizione, Routledge
Teaching Methods
Lezioni frontali ed esperimenti in classe.
Assessment Method
Attending students: 1 Continuous assessment (one of three components): - Attendance and class participation - In-class tests - three empirical data analysis assignments based on experimental data 2. Final written exam (two of three components) Non-attending students will be assessed based on a single final exam, which will account for 100% of the final grade. For further information, please consult the course page on LUISS Learn.
Week 1
Introduction to Behavioral Economics
Readings:
- Cartwright, Chapter 1
Week 2
Heuristics and Biases
Readings:
- Cartwright, Chapter 2
- Thaler and Sunstein (2008), Nudge: Improving Decisions About Health, Wealth, and Happiness, Yale University Press, Chapter 1
Week 3
Introduction to Data Analysis with Stata
Week 4
Choices under Risk and Uncertainty
Readings:
- Cartwright, Chapter 3
- Levitt, List, Neckermann, and Sadoff (2016), “The behavioralist goes to school: Leveraging behavioral economics to improve educational performance,” American Economic Journal: Economic Policy, Vol. 8, No. 4, pp. 183–2019
- Cordes, Dertwinkel-Kalt, and Werner (2023), “What drives demand for loot boxes? An experimental study,” working paper
- Kirchler, Lindner, and Weitzel (2018), “Rankings and risk-taking in the finance industry,” Journal of Finance, Vol. 73, No. 5, pp. 2271–2302
Week 5
Choices under Risk and Uncertainty
Readings:
- Cartwright, Chapter 3
- Levitt, List, Neckermann, and Sadoff (2016), “The behavioralist goes to school: Leveraging behavioral economics to improve educational performance,” American Economic Journal: Economic Policy, Vol. 8, No. 4, pp. 183–2019
- Cordes, Dertwinkel-Kalt, and Werner (2023), “What drives demand for loot boxes? An experimental study,” working paper
- Kirchler, Lindner, and Weitzel (2018), “Rankings and risk-taking in the finance industry,” Journal of Finance, Vol. 73, No. 5, pp. 2271–2302
Week 6
Intertemporal Choices
Readings:
- Cartwright, Chapter 4
- DellaVigna and Malmendier (2006), “Paying not to go to the gym,” American Economic Review, Vol. 96, No. 3, pp. 694–719
- Levitt, List, Neckermann, and Sadoff (2016), “The behavioralist goes to school: Leveraging behavioral economics to improve educational performance,” American Economic Journal: Economic Policy, Vol. 8, No. 4, pp. 183–2019
Week 7
Learning, Narratives, Biases, and Persuasion
Readings:
Cartwright, Chapter 5 (Sections 5.1.0, 5.2.0, 5.2.1, and 5.2.3)
Bursztyn, Rao, Roth, and Yanagizawa‑Drott (2023), “Opinions as facts,” Review of Economic Studies, vol. 90, no. 4, pp. 1832–1864
Graeber, Roth, and Zimmermann (2024), “Stories, statistics, and memory,” Quarterly Journal of Economics, forthcoming
Levy (2021), “Social media, news consumption, and polarization: Evidence from a field experiment,” American Economic Review, vol. 111, no. 3, pp. 831–870
Schwardmann, Tripodi, and van der Weele (2022), “Self‑persuasion: Evidence from field experiments at international debating competitions,” American Economic Review, vol. 112, no. 4, pp. 1118–1146
Week 8
Learning, Narratives, Biases, and Persuasion
Readings:
Cartwright, Chapter 5 (Sections 5.1.0, 5.2.0, 5.2.1, and 5.2.3)
Bursztyn, Rao, Roth, and Yanagizawa‑Drott (2023), “Opinions as facts,” Review of Economic Studies, vol. 90, no. 4, pp. 1832–1864
Graeber, Roth, and Zimmermann (2024), “Stories, statistics, and memory,” Quarterly Journal of Economics, forthcoming
Levy (2021), “Social media, news consumption, and polarization: Evidence from a field experiment,” American Economic Review, vol. 111, no. 3, pp. 831–870
Schwardmann, Tripodi, and van der Weele (2022), “Self‑persuasion: Evidence from field experiments at international debating competitions,” American Economic Review, vol. 112, no. 4, pp. 1118–1146
Week 9
Social Interaction
Readings:
- Cartwright, Capitolo 7 (Sezioni da 7.1.0 a 7.1.5) e 11 (Sezione 11.1.1)
- Balafoutas, Nikiforakis e Rockenbach (2014), "Direct and indirect punishment among strangers in the field", Proceedings of the National Academy of Sciences, vol. 111, n. 45, pp. 15924-15927
- Ehret, Constantino, Weber, Efferson e Vogt (2022), "Group identities can undermine social tipping after intervention", Nature Human Behavior, vol. 6, pp. 1669-1679
- Fehr e Leibbrandt (2011), "A field study on cooperativeness and impatience in the tragedy of the commons", Journal of Public Economics, vol. 95, n. 9-10, pp. 1144-1155
- Hermann, Thöni e Gächter (2008), "Antisocial punishment across societies", Science, vol. 319, n. 5868, pp. 1362-1367
- Levitt e List (2007), "What do laboratory experiments measuring social preferences reveal about the real world?", Journal of Economic Perspectives, vol. 21, n. 2, pp. 153-174
Week 10
Social Preferences and Social Comparisons
Readings:
Cartwright, Chapter 7 (Sections 7.2.0–7.5.3)
Allcott (2011), “Social norms and energy conservation,” Journal of Public Economics, vol. 95, nos. 9–10, pp. 1082–1095
Andreoni (1990), “Impure altruism and donations to public goods: A theory of warm‑glow giving,” Economic Journal, vol. 100, no. 101, pp. 464–477
Andreoni, Rao, and Trachtman (2017), “Avoiding the ask: A field experiment on altruism, empathy, and charitable giving,” Journal of Political Economy, vol. 125, no. 3, pp. 625–653
Birkeland, Cappelen, Sørensen, and Tungodden (2014), “An experimental study of prosocial motivation among criminals,” Experimental Economics, vol. 17, pp. 501–511
Cappelen, Eichele, Hugdahl, Specht, Sørensen, and Tungodden (2014), “Equity theory and fair inequality: A neuroeconomic study,” Proceedings of the National Academy of Sciences, vol. 111, no. 43, pp. 15368–15372
DellaVigna, List, and Malmendier (2012), “Testing for altruism and social pressure in charitable giving,” Quarterly Journal of Economics, vol. 127, no. 1, pp. 1–56
Fabbri and Bigoni (2021), “How property shapes distributional preferences,” IZA Discussion Paper no. 14768
Gneezy and Rustichini (2000), “A fine is a price,” Journal of Legal Studies, vol. 29, no. 1, pp. 1–17
Goette and Tripodi (2024), “The limits of social recognition: Experimental evidence from blood donors,” Journal of Public Economics, vol. 231, no. 105069
Week 11
Social Preferences and Social Comparisons
Readings:
Cartwright, Chapter 7 (Sections 7.2.0–7.5.3)
Allcott (2011), “Social norms and energy conservation,” Journal of Public Economics, vol. 95, nos. 9–10, pp. 1082–1095
Andreoni (1990), “Impure altruism and donations to public goods: A theory of warm‑glow giving,” Economic Journal, vol. 100, no. 101, pp. 464–477
Andreoni, Rao, and Trachtman (2017), “Avoiding the ask: A field experiment on altruism, empathy, and charitable giving,” Journal of Political Economy, vol. 125, no. 3, pp. 625–653
Birkeland, Cappelen, Sørensen, and Tungodden (2014), “An experimental study of prosocial motivation among criminals,” Experimental Economics, vol. 17, pp. 501–511
Cappelen, Eichele, Hugdahl, Specht, Sørensen, and Tungodden (2014), “Equity theory and fair inequality: A neuroeconomic study,” Proceedings of the National Academy of Sciences, vol. 111, no. 43, pp. 15368–15372
DellaVigna, List, and Malmendier (2012), “Testing for altruism and social pressure in charitable giving,” Quarterly Journal of Economics, vol. 127, no. 1, pp. 1–56
Fabbri and Bigoni (2021), “How property shapes distributional preferences,” IZA Discussion Paper no. 14768
Gneezy and Rustichini (2000), “A fine is a price,” Journal of Legal Studies, vol. 29, no. 1, pp. 1–17
Goette and Tripodi (2024), “The limits of social recognition: Experimental evidence from blood donors,” Journal of Public Economics, vol. 231, no. 105069
Week 12
Salience and Nudge
Readings:
Cartwright, Chapter 11 (Sections 11.2.0–11.2.5)
Chetty, Looney, and Kroft (2009), “Salience and taxation: Theory and evidence,” American Economic Review, vol. 99, no. 4, pp. 1145–1177
Hagmann, Ho, and Loewenstein (2019), “Nudging out support for a carbon tax,” Nature Climate Change, vol. 9, pp. 484–489
Kurz (2018), “Nudging to reduce meat consumption: Immediate and persistent effects of an intervention at a university restaurant,” Journal of Environmental Economics and Management, vol. 90, pp. 317–341
Madrian and Shea (2001), “The power of suggestion: Inertia in 401(k) participation and savings behavior,” Quarterly Journal of Economics, vol. 116, no. 4, pp. 1149–1187
Scheiber (2017), “How Uber uses psychological tricks to push its drivers’ buttons,” The New York Times