Warning! The directory is not yet complete and will be amended until the beginning of the term.
040065 KU Modelling bounded rationality (MA) (2021W)
Smart heuristics and other alternatives to rational behavior
Continuous assessment of course work
Labels
REMOTE
Registration/Deregistration
Note: The time of your registration within the registration period has no effect on the allocation of places (no first come, first served).
- Registration is open from Mo 13.09.2021 09:00 to Th 23.09.2021 12:00
- Registration is open from Mo 27.09.2021 09:00 to We 29.09.2021 12:00
- Deregistration possible until Fr 15.10.2021 23:59
Details
max. 50 participants
Language: English
Lecturers
Classes (iCal) - next class is marked with N
midterm 23.11 from 11:30 to 13:00 DIGITAL online
final 31.1. from 11:30 to 13:00 hs9
- Monday 04.10. 11:30 - 13:00 Digital
- Tuesday 05.10. 11:30 - 13:00 Digital
- Monday 11.10. 11:30 - 13:00 Digital
- Tuesday 12.10. 11:30 - 13:00 Digital
- Monday 18.10. 11:30 - 13:00 Digital
- Tuesday 19.10. 11:30 - 13:00 Digital
- Monday 25.10. 11:30 - 13:00 Digital
- Monday 08.11. 11:30 - 13:00 Digital
- Tuesday 09.11. 11:30 - 13:00 Digital
- Monday 15.11. 11:30 - 13:00 Digital
- Tuesday 16.11. 11:30 - 13:00 Digital
- Monday 22.11. 11:30 - 13:00 Digital
- Tuesday 23.11. 11:30 - 13:00 Digital
- Monday 29.11. 11:30 - 13:00 Digital
- Tuesday 30.11. 11:30 - 13:00 Digital
- Monday 06.12. 11:30 - 13:00 Digital
- Tuesday 07.12. 11:30 - 13:00 Digital
- Monday 13.12. 11:30 - 13:00 Digital
- Tuesday 14.12. 11:30 - 13:00 Digital
- Monday 10.01. 11:30 - 13:00 Digital
- Tuesday 11.01. 11:30 - 13:00 Digital
- Monday 17.01. 11:30 - 13:00 Digital
- Tuesday 18.01. 11:30 - 13:00 Digital
- Monday 24.01. 11:30 - 13:00 Digital
- Tuesday 25.01. 11:30 - 13:00 Digital
- Monday 31.01. 09:45 - 13:00 Digital
Information
Aims, contents and method of the course
Rationality in economics typically refers to predictions based on expected utility maximization. Subjects need to know all their options, need to know all possible consequences of any of their choices and have to assign probabilities to any event that they are uncertain about. In this course we are interested in methodologies that do not make these heroic assumptions but satisfy some principles that identify behavior as being optimal in some sense. Behavior is optimal in a minimal sense if it can be backed up by a reason for acting. We will not limit ourselves to this minimal interpretation of optimality as this will not give us any insight as to whether we should expect such behavior to survive over time. The presumption is that a heuristic as a model of how to make choices can only emerge if it has properties that signal it out as being optimal or particularly well adapted to a situation. A central paper in this course (Schlag, 1998) was recently elected as one of the 50 most influential papers in a leading economic theory journal in the past 50 years. The objective therein is to understand how individual can learn from each other with only very limited understanding of the consequences of their behavior. It is the way that individuals learn which can make them very smart as a whole. We will also consider individuals who can only learn from their own past experiences. Buzz words include imitation, cultural evolution, heuristics, tabus and reinforcement learning. A central focus of the course will be on fostering a discussion about the philosophical and economic approaches to rationality and how the latter can be relaxed.
Assessment and permitted materials
Exams will be open book. The grade of the course is based on a midterm (35%), a final exam (35%) and oral participation together with some take home assignments (30%).
Minimum requirements and assessment criteria
This is both a course for the Master in Economics and for the Master in Philosophy and Economics. It should only be taken if you are familiar with expected utility theory (von Neumann Morgenstern preferences). Mathematical notation will be used to describe what individuals are doing and how this changes over time. Mathematics at a very simple level will be used to define optimality and then to compute what is optimal. In particular, the original article (Schlag, 1998) is mathematically unnecessarily advanced. We will see in the course that the basic intuition does not require such elaborate math.
Examination topics
Everything that was taught in class.
Reading list
Schlag, K.H. (1998), Why Imitate, and if so, How? A Boundedly Rational Approach to Multi-Armed Bandits, Journal of Economic Theory 78 (1998), 130–156.
https://www.sciencedirect.com/journal/journal-of-economic-theory/special-issue/10FDMHVW1C5
Börgers, T., A. Morales, and R. Sarin (2004), Expedient and monotone learning rules, Econometrica 72(2), 383–405.
Weibull, J. (1997), Evolutionary Game Theory, MIT Press.
Fudenberg, D., and D. Levine (1998), The Theory of Learning in Games, MIT Press.
https://www.sciencedirect.com/journal/journal-of-economic-theory/special-issue/10FDMHVW1C5
Börgers, T., A. Morales, and R. Sarin (2004), Expedient and monotone learning rules, Econometrica 72(2), 383–405.
Weibull, J. (1997), Evolutionary Game Theory, MIT Press.
Fudenberg, D., and D. Levine (1998), The Theory of Learning in Games, MIT Press.
Association in the course directory
Last modified: Fr 12.05.2023 00:12