Programmes

Introduction to Behavioural Economics

  • Summer schools
  • Department of Economics
  • Application code SS-EC200
  • Starting 2020
  • Short course: Closed
  • Location: Houghton Street, London

UPDATE: Due to the global COVID-19 pandemic we will no longer be offering this course in summer 2020. Please check our latest news on this situation here.

This course will provide students with a clear introduction to the principles and methods of Behavioural Economics. Behavioural economics considers the ways that people are more social, more impulsive, less adept at using information, and more susceptible to psychological biases than the standard economic models assume.  We will explore key departures, and the consequences for individuals, firms, and policy.

-          To provide students with an introduction to the principles and methods of Behavioural Economics.

-          To provide an overview of how behavioural principles have been applied to economic problems both in microeconomics and macroeconomics.

This course focuses on behavioural economics. Students who are more interested in using behavioural insights for strategic decision-making should consider MG110.


Session: Two
Dates: 13 July – 31 July 2020
Lecturers: Dr Matthew Levy and Dr Gianluca Benigno


 

Programme details

Key facts

Level: 200 level. Read more information on levels in our FAQs

Fees:  Please see Fees and payments

Lectures: 36 hours 

Classes: 18 hours

Assessment*: Two written examinations

Typical credit**: 3-4 credits (US) 7.5 ECTS points (EU)


*Assessment is optional

**You will need to check with your home institution

For more information on exams and credit, read Teaching and assessment

Prerequisites

Introductory macroeconomics and microeconomics.

Programme structure

This course provides an introduction to the foundations of behavioural economics. The focus of the course is on the understanding of the principles behind the behavioural approach in addressing economics problems and on the development of up-to-date analytical tools, drawn from recent research, and their application to a variety of economic situations.

The course will be thematically organized as ‘behavioural macroeconomics’ and ‘behavioural microeconomics’. In the behavioural macro part, there will be an introduction on the rational expectations framework and then there will be an overview of a variety of applications of behavioural models to finance, labour market, saving choices and monetary policy to address “anomalies”. We also plan to cover models of learning and applications of sunspot theories. Behavioural micro will focus on departures from the assumptions of selfishness, time consistency, rational inference, and strategic sophistication with applications to markets, policy, and strategic settings. Behavioural game theoretic models (e.g. “level-k”) will be introduced (Nash equilibrium not required as a prerequisite).

Course outcomes

By the end of the course students should be able to:

-          Identify and evaluate evidence for systematic departures of economic behaviour from the predictions of the neoclassical model, and psychological explanations for these anomalies.

-          Incorporate psychologically motivated assumptions into economic models, and interpret the implications of these assumptions.

-          Explain how these models change the predictions for equilibrium behaviour and welfare analysis, and assess the implications for optimal policy.

-          Compare the predictions of neoclassical and behavioural models, and evaluate the best method for approaching a given topic.

Teaching

The LSE Department of Economics is one of the biggest and best in the world, with expertise across the full spectrum of mainstream economics. A long-standing commitment to remaining at the cutting edge of developments in the field has ensured the lasting impact of its work on the discipline as a whole. Almost every major intellectual development within Economics over the past fifty years has had input from members of the department, which counts ten Nobel Prize winners among its current and former staff and students. Alumni are employed in a wide range of national and international organisations, in government, international institutions, business and finance.

The Department of Economics is a leading research department, consistently ranked in the top 20 economics departments worldwide. This is reflected in the 2014 Research Assessment Exercise which recognised the Department's outstanding contribution to the field. According to the REF 2014 results, 56 per cent of the Department’s research output was graded 4 star (the highest category), indicating that it is 'world-leading'. A further 33 per cent was designated 'internationally excellent' (3 star).

On this three week intensive programme, you will engage with and learn from full-time lecturers from the LSE’s economics faculty.

Reading materials

One suggested (non-mandatory) textbook for the course is An Introduction to Behavioural Economics by Nick Wilkinson and Matthew Klaes, (2012), Palgrave MacMillan. Another good reading is Animal Spirits by George Akerlof and Robert Shiller, (2009), Princeton University Press.

Students wishing to review their microeconomic theory should consult a textbook on intermediate microeconomic theory, such as Morgan, Katz and Rosen, (2006), Microeconomics, McGraw Hill or J. Perloff, (2008), Microeconomics: Theory and Applications with Calculus, Pearson.

*A more detailed reading list will be supplied prior to the start of the programme

**Course content, faculty and dates may be subject to change without prior notice

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