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Unit information: Behavioural Economics in 2017/18

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Unit name Behavioural Economics
Unit code EFIM30027
Credit points 20
Level of study H/6
Teaching block(s) Teaching Block 2 (weeks 13 - 24)
Unit director Dr. Christoph Koenig
Open unit status Not open

EFIM20008 Intermediate Economics 1 and either ECON20020 Econometrics or EFIM20010 Applied Quantitative Research Methods



School/department School of Economics
Faculty Faculty of Social Sciences and Law


Modern economics has started to use models where economic decision making and action is not completely rational. This unit will consider theories of and evidence for such behaviour. Potential topics would include: paradoxes of having too much choice; framing effects; non-geometric discounting; problems of how to model individual behaviour if an individual realises that s/he is irrational; policy consequences; empirical research; biological research on testosterone, etc. Empirical examples could include mis-selling, financial literacy, pensions, financial markets.

Intended learning outcomes

On successful completion of this unit a student will be able:

  • to analyse and discuss a wide range of issues in behavioural economics;
  • to learn about the conceptual problems in modelling and describing such behaviour;
  • to have an overview of the empirical evidence for such behaviours;
  • to understand the policy implications of boundedly rational behaviour.

Teaching details

18 hours of lectures and 9 hours of classes.

Assessment Details


One essay (2500 words) and two short problem-solving exercises.


Three-hour closed-book examination consisting of essays (66%) and short problem-solving questions (34%) at the end of the relevant teaching block.

The exam paper addresses all the learning outcomes.

Reading and References

Thaler and Sunstein (2009) Nudge: Improving Decisions About Health, Wealth, and Happiness

various articles, such as

Backus, Routledge and Zin (2004) “Exotic preferences for macroeconomists” NBER Macroeconomics Annual Vol. 19, pp. 319-390

Tversky and Kahneman (1992) “Advances in prospect theory: cumulative representation of uncertainty” Journal of Risk and Uncertainty, 5(1), pp.297-323.

Plott and Zeiler (2005) “The willingness-to-pay / willingness-to-accept gap, then endowment effect ... “American Economic Review, 95(3), pp.530-45