Schedule

Below is a roadmap for the semester.

Part I: Non-Standard Preferences

Week 1. Introduction

  • Psychology and Economics: The Methodologies
  • Psychology and Economics: The Fields
  • Methodological Topic: Reading the Psychology Journals

Weeks 2-5. Making Choices over Time

  • Default Effects

  • Household Finance in the United States

  • Theory and (Intuitive) Evidence on Present Bias

  • Procrastination

  • Extended Applications:

    • Investment Goods
    • Job Search

  • Homework #1 Assigned

  • Extended Applications, Part II:

    • Work and Effort
    • Credit Card Borrowing
    • Alcoholism and Other Bad Choices
    • Commitment Devices — Evidence from the Field

  • Methodological Topic: Commitment Field Experiment Designs

  • Common Errors in Applying Present-Biased Preferences

  • Laboratory Evidence

  • Methodological Topic: Experimental Design and Your Future Research

Weeks 6-7. Reference-Dependent Preferences

  • Theory and (Intuitive) Evidence on Reference Dependence

  • Extended Applications:

    • Housing Market
    • Evidence of Excess Bunching in Running, Taxes, Mergers, and Job Search.

  • Homework #2 Assigned

  • The Taxi Wars

  • Extended Applications, Part II:

    • Daily Labor Supply
    • Employment and Effort

  • Methodological Topic: Paths Toward a Winning Job-Market Paper

  • Extended Applications, Part III:

    • Domestic Violence
    • Golf
    • Job Search
    • Insurance Choices

  • Laboratory Evidence

    • Forward vs Backward Reference Points
    • The Endowment Effect

  • Meet with Ben to Discuss Paper Topic

Part II: Errors in Reasoning

Week 8. Biases in Statistical Reasoning

  • Representativeness
  • Availability
  • Overconfidence
  • Law of Small Numbers
  • Extended Applications:
    • Corporate Finance
    • Extrapolation and Flood Insurance
  • Homework #3 Assigned

Week 9. Heuristic Choice

  • Theory and Intuitive Evidence of Heuristic Choice
    • Anchoring
    • Narrow Bracketing
    • Mental Accounting
    • Ironing and spotlighting
    • Projection bias

Week 10. Guest Lecture + Limited Attention

  • Extended Applications:
    • A Simple Model of Shipping Costs
    • (In)Attention to Taxes
    • Left-Digit Inattention in Financial Markets
    • Choice Avoidance
    • Preference for Familiar Things (Non-Novelty Bias)

Week 11. Context-Dependent Choices

  • Competing Theories of Context-Dependent Choices
    • Salience
    • Relative Thinking
    • Focusing
  • Applications in Empirical Work
  • Laboratory Evidence
  • Paper Topic Due

Part III: Non-Standard Preferences

Week 11/12. Errors in Simple Choices

  • Confusion
  • Choice of Dominated Options
  • Mental Accounting
  • (Erroneous) Persuasion
  • Emotional Choices: Moods, Arousal, and Other Effects

Weeks 12-13. Social Preferences

  • Altruism
  • Altruism within the Workplace
    • Shaping Social Preferences
  • Warm Glow and Charitable Giving
  • Inequity Aversion and Reciprocity
    • Workplace Effort
  • Inequity Aversion and Reciprocity Gift Exchange in the Lab and Field
  • Social Pressure, Signaling, and Social Norms
  • Methodological Topic: Running a (Field) Experiment

Part IV: Applications of Psychology and Economics Across the Discipline

Week 14. Applications to Public Economics and Welfare Measurement

  • Illustrative Policy Questions
  • The (Behavioral) Public Economics Framework
    • Key Concepts for Welfare Analysis
    • Simple Theoretical Framework(s)
  • Extended Examples:
    • Energy Efficiency
    • Tax Salience
    • Soda Taxes
    • State-Run Lotteries
    • Income Tax Misunderstanding
    • Payday Lending
    • “Nudges”

Week 15. Behavioral IO

  • Psychology and Economics in Industrial Organization
    • “Behavioral” Consumers
    • “Behavioral” Firms
  • Methodological Topic: Markets and Non-Standard Behavior
  • Behavioral Political Economy
  • Behavioral Economics in Equilibrium

Finale. Behavioral Structural Estimation.