114-0339/02 – Behavioral Economics (BE)
| Gurantor department | Department of Economics | Credits | 5 |
| Subject guarantor | doc. Ing. Aleš Melecký, Ph.D. | Subject version guarantor | doc. Ing. Aleš Melecký, Ph.D. |
| Study level | undergraduate or graduate | Requirement | Choice-compulsory type B |
| Year | 2 | Semester | summer |
| | Study language | Czech |
| Year of introduction | 2019/2020 | Year of cancellation | |
| Intended for the faculties | EKF | Intended for study types | Follow-up Master |
Subject aims expressed by acquired skills and competences
Characterize the nature of behavioral economics and explain the basic concepts in this field.
Describe the differences between classical and behavioral economics and criticism of rational decision making.
Introduce basic behavioral heuristics and their practical applications.
Introduce the penetration of behavioral economics into other areas such as behavioral finance and marketing.
Teaching methods
Lectures
Seminars
Summary
Economic theory perceives in its models a human as a rational individual maximizing its utility. Such an individual is only considered to be the optimal theoretical concept, and the actual behavior of a person may sometimes appear to be seemingly irrational. In this course, we abandon the assumptions of traditional models and focus on both, consumer behavioral theory and business theory, but also on investment theory and finance from a behavioral perspective. The experimental economics overcome the barrier of pure rationality and selfishness, and along with behavioral economics it allows economists to observe human behavior.
Compulsory literature:
Recommended literature:
Way of continuous check of knowledge in the course of semester
Project presentation + credit test - max. 30 points, min. 18 b.
Exam - max. 70 points, min. 21 b.
The graduation conditions for students with an individual plan are the same.
Compulsory participation in exercises is not required.
E-learning
Other requirements
There are no additional requirements for the student.
Prerequisities
Subject has no prerequisities.
Co-requisities
Subject has no co-requisities.
Subject syllabus:
1) Introduction to Behavioural Economics
• Antecedents of behavioural economics
• Methodology of economics
• Theoretical approaches in behavioural economics
• Experimental method in economics
• Examples of behavioural evidence
2) Behavioural Decision under Risk and Uncertainty
• Classical decision theory
• Subjective expected utility theory
• Violations of expected utility theory
3) Behavioural Models of Decision Making
• Rank dependent utility theory
• Prospect theory
• Human behaviour for extreme probability events
• Risk preferences and time preferences
4) Applications of Behavioural Decision Theory
• Endowment effect and exchange asymmetries
• Myopic loss aversion
• Goals and contracts as reference points
• Moral hazard, loss aversion, and optimal contracts
5) Present Bias and Time-inconsistency
• Evidence on temporal human choice
• Behavioural models of time discounting
• Applications of present-biased preferences
6) Behavioural Game Theory
• Evidence of strategic human choice
• Models of behavioural game theory
7) Behavioural models of learning
• Evolutionary game theory
• Models of learning
• Stochastic social dynamics
8) Emotions
• Emotions of human behaviour
• Interactions between emotions and cognition
9) Bounded Rationality
• Judgment heuristics
• The law of small numbers
• Conjunction fallacy
• The availability heuristics
10) Behavioural Finance
• Neoclassical theory of capital markets and its limitations
• Behavioural perspective on investors` behaviour
• Speculative bubbles as a characteristics of market anomalies
11) Social Preferences and Labour Economics
• Evidence on social behaviour
• Models of fairness and reciprocity
• Applications in labour economics
12) Economics of information
• Moral hazard and incentive contracts
• Adverse selection and signaling
• Economics and psychology
13) Altruism, reciprocity and peer effect
14) Practical applications of behavioral economics
Conditions for subject completion
Occurrence in study plans
Occurrence in special blocks
Assessment of instruction