AEM 4140 - Behavioral Economics and Managerial Decisions

Spring. 3 credits. Letter grades only.

Prerequisite: AEM 2600 or ECON 3030 or PUBPOL 2000. Course fee: $40 for behavioral experiments in discussion sections.

G. Fisher.

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.

Outcome 1: Students will be able to explain the major decision making anomalies that constitute the core of behavioral economics.

Outcome 2: Apply lessons from behavioral economics to actual business decision making.

Outcome 3: Design laboratory experiments testing hypotheses from economics and psychology that relate to economic decision making.

Outcome 4: Explain IRB requirements and procedures regarding human subjects and confidentiality.

Outcome 5: Administer experiments and analyze the data.