MG452      Half Unit
Behavioural Economics for Management

This information is for the 2013/14 session.

Teacher responsible

Dr Kristof Madarasz NAB5.36


This course is available on the MSc in Economics and Managment, MSc in Management and MSc in Management and Strategy. This course is available with permission as an outside option to students on other programmes where regulations permit.


Graduate level Microeconomics, Game Theory or Managerial Economics, Graduate level Econometrics or Quantitative Analysis is required.

Course content

The course covers formal (mathematical) models of behavioural economics and discusses both experimental and field evidence that motivate and test various aspects of these models.

This course is a post-graduate introduction to behavioural economics and strategy. The topics to be discussed are

1. Risk Perceptions, Loss Aversion and Reference-Dependence.
2. Procrastination, Self Control and Choice over Time.
3. Social Motivation: Image, Reciprocity and Inequity.
4. Processing Information and Mistakes in Cognition
5. Naivite and Heuristics in Strategic Thinking
6. Happiness and Welfare


30 hours of lectures in the LT. 2 hours of lectures in the ST.

Formative coursework

A mock exam comprising of problem sets.

Indicative reading

CamererCamerer, Colin, Linda Babcock, George Loewenstein, and Richard Thaler (1997) "Labor Supply of New York City Cabdrivers: One Day at a Time," Quarterly Journal of Economics

Fehr Ernst and Simon Gachter (2002) Fairness and Retaliation: The Economics of Reciprocity Journal of Economic Perspectives, 2000 (14); 159-181.

Kahneman, Daniel, and Amos Tversky (1979) "Prospect Theory: An Analysis of Decision under Risk" Econometrica, 47(2): 263-292.

Koszegi, B. and Matthew Rabin (2006) Reference-Dependent Preferences. Quarterly Journal of Economics

Laibson, David. (1997) Golden Eggs and Hyperbolic Discounting. Quarterly Journal of Economics

List, John A. 2004. "Neoclassical Theory Versus Prospect Theory: Evidence from the Marketplace," Econometrica, 72(2): 615-625.

Madarasz, Kristof (2012) Information Projection: Model and Applications. Review of Economic Studies

Thaler, Richard and Shlomo Benartzi (2004). Save More Tomorrow: Using Behavioral Economics to Increase Employee Saving, Journal of Political Economy.

Rabin, Matthew (2002) Inference by the Believers in the Law of Small Numbers. Quarterly Journal of Economics

Stortz, Richard. (1955) Myopia and Inconsistency in Dynamic Utility Maximization. Review of Economic Studies


Exam (100%, duration: 2 hours) in the main exam period.

Key facts

Department: Management

Total students 2012/13: 17

Average class size 2012/13: 10

Value: Half Unit

Guidelines for interpreting course guide information

Personal development skills

  • Team working
  • Problem solving
  • Application of information skills
  • Communication
  • Application of numeracy skills