040050 KU Behavioral Welfare Economics (MA) (2025S)

Knowledge in introductory microeconomics is highly recommended.

Content:

Behavioral and Experimental Economics are vibrant fields of research within economics. It continues to shed new light on many important issues in economics. These fields have received wide recognition in recent years, with notable contributors receiving Nobel prizes (for example, starting with Reinhard Selten in 1994, and most recently Abhijit Banerjee and Esther Duflo 2019).

This course explores the fundamental principles that underlie the intersection of psychology and economics, shedding light on the complexities of human decision-making in economic contexts. Through a combination of theoretical analysis, empirical studies, and experimental methods, students will gain a solid understanding of the factors influencing economic choices. By challenging conventional assumptions and offering innovative perspectives, this course provides a foundation for critically analyzing economic theories and practices.

The course focuses on how people behave in social environments, and the implications of deviations from rationality for policy making. The parallel course “Behavioral Decision Making” focuses more on behavioral patterns that deviate from the rational behavior prescribed by neoclassical economics, as well as alternative theories that can account for these deviations

Throughout the course, we will cover the most important topics in behavioral and experimental economics. By the end, you will have acquired:
1. A good intuition for behavioral deviations from conventional rational settings.
2. A toolbox for formalizing your intuitions using simple mathematical representations.
3. An understanding of how to design experiments and how to evaluate their quality.

Here is a preview of some of the questions we will discuss in this course:
• How do fairness concerns shape people’s economic behavior?
• When do people behave altruistically? What makes them behave more selfishly?
• When and how can (should) politicians intervene, if people’s behavior deviates from rationality?
• …

Aims:
This course aims to:
1. Provide the students with frameworks that enable them to analyze human behavior rigorously;
2. Emphasize the importance of causal inference and the role of experiments.
3. Provide real-world examples of how these new theories can be applied to address economic problems.

Methods:
The course consists of lectures, discussions, and student presentations. After a short introduction to a topic by the lecturer, classes will be based on detailed discussions of selected papers, which are introduced by a student presentation. A list of references will be provided.