AEM 4140 - Behavioral Economics and Managerial Decisions

Fall. 3 credits. Letter grades only.

Prerequisite: ECON 3030 or PAM 2000. Course fee: Lab fee $40. Enrollment limited to: juniors or seniors.

D. R. Just, W. P. Schulze.

Behavioral economics integrates psychology and economics by identifying systematic anomalies in decision making. These are now recognized to be an important source of error in business decisions, and they provide the foundation for both behavioral marketing and finance. The course compares rational choice theory with behavior both in lecture and through a series of economics experiments in which students face situations that are likely to lead to anomalies such as “the winner’s curse,” the status quo bias, hyperbolic discounting, and bias in assessing risks. Students have the opportunity to evaluate their own decision making.