Unformatted text preview: Econ 330 – Economic Behavior and Psychology Prof. Justin Sydnor Case Western Reserve University Spring 2010 What is this course about? This course is an introduction to the field of “psychology and economics”, which is also often referred to as “behavioral economics”. The field is somewhat difficult to define, but most of us working in the area share the belief that economists can benefit from insights and ideas generated in other fields that help us better understand human behavior. Most of the insights come from psychology, but there are increasing overlaps with sociology, neuroscience, and even genetics. The field, however, is not a fundamentally different way of doing economics or a departure from main‐
stream economics. The best work in behavioral economics uses all of the important economic tools, including models that simplify the world, theories that are testable with data, experimentation, and sophisticated econometric analysis. Importantly, this is NOT a class about “how people are crazy” or “why what you learned in intro micro is wrong”. People are complicated and economists of all stripes have long recognized that understanding complex human behavior requires using simplified models. These models are, of course, wrong – in the sense that they do not capture all details about people – but that is not a flaw in economics; it is the power of economics. So behavioral economics is not a critique that traditional economics does not make “realistic assumptions” but rather an approach that recognizes that other disciplines have established consistent findings that can be carefully incorporated into economic analysis. I will challenge you (and myself) throughout this course to avoid becoming glib or condescending about how people behave and how economists usually model individuals. We should always try to recognize that we are working with complex and often subtle ideas. A thoughtful approach to these issues will hopefully push forward our understanding of how the world works. And it should be a lot of fun too! A few words about me: I earned my Ph.D. from U.C. Berkeley, which along with Harvard is one of the primary homes of behavioral economics. As we go along and get introduced to some of the leading thinkers in this area (many of them from Berkeley), I will try to infuse the course with some of my thoughts about who these people are and where their thinking comes from. It is important to realize that I am an economist by training – and although I find psychology very interesting – I have not been trained in psychology. My methods and ways of thinking are those of an economist. Office Hours: I will hold office hours in my office (PBL 276) Mondays and Wednesdays from 3:30 – 5:00. I am also more than happy to make other arrangements, so just talk to me about meeting up. I will hold extra office hours before the midterm and final exam. I will also often adjust office hours, so watch for changes in lectures. Problem Sets: There will be series of problem sets in this course, approximately 5. The problem sets will include mathematical problems based on simple economic models, as well as questions on the interpretation of these problems. I will also be asking you to think about how to apply findings and ideas from the course to economic issues. I encourage you to work in groups, but you need to write up your own answers. As in almost all economics classes, the problem sets are absolutely crucial to understanding the material in the course. I will not accept any late problem sets. The only exception is for valid and verified medical emergencies. If you know you cannot make it to class when an assignment is due, make sure to make arrangements to get the work to me in some other way. Short Essays and Writeups: I will periodically assign short writing assignments. These will generally be essays of one to two pages that will ask you to either reflect on an assigned reading or give your thoughts on a particular idea. Group Project on a “Nudge” Product/Service: During the course we will be talking about a number of decision‐making problems and biases that people have. We will also discuss how it may be possible to create products and services that help people overcome these biases. In the last part of the semester, I will ask you to form groups and work on a group project where you will design such a product or service. You will write this up and turn it in for a group grade. More details as the semester progresses. Readings: There is no textbook (yet) for the material in this course. However, I will periodically assign readings of papers or small parts of books. Whenever possible, I will post pdf files or links to the papers on our blackboard site. In addition, I would like you to purchase a copy of Predictably Irrational: The Hidden Forces That Shape Our Decisions, by Dan Ariely. You should be able to find it for around $20 online. We won’t use the book right away, but there will be some readings from it later in the semester. Blackboard Site: I will use the blackboard site extensively in this class. All lecture slides, problem sets, problem‐set solutions, reading assignments, and essay assignments will be posted to Blackboard. I expect you to check it regularly. Classroom Clickers: For this class, we will be using the iClicker classroom response system. This will allow us to get a lot of interactive feedback throughout the course in a way that would otherwise be hard with so many people. I expect you to bring your clicker with you to each lecture. Class Participation: Class participation is important to me, especially for this class. The clickers will allow everyone to participate in the class, even if you are a bit shy. I am also looking for people to provide opinions, answer questions, and most of all ask questions. We all know that asking questions is a positive externality that benefits other students in the course, and I will look positively on good question asking. After each class, I will grade everyone on participation on a 5‐point scale. Good participation can include actively participating with your clicker, answering and asking questions, providing opinions, simply being alert and flattering me by seeming interested, etc… I will drop your 3 lowest participation grades to allow for missed classes and “off days”. Midterms: There will be two in‐class midterms for this course. The first will be held on Monday, Feb 8th. The second is scheduled for Wednesday, March 24th. Final Exam: The final exam will be held during the scheduled exam time on the registrar’s website. It will be cumulative, but will be heavily weighted toward the material in the last part of the course. Grading: Participation 10% Problem Sets 10% Short Essays 10% Group Project 5% Midterm 1 20% Midterm 2 20% Final 25% ...
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