Universität Wien

040065 KU Modelling bounded rationality (MA) (2023W)

Smart heuristics and other alternatives to rational behavior

8.00 ECTS (4.00 SWS), SPL 4 - Wirtschaftswissenschaften
Continuous assessment of course work
ON-SITE
Moodle

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).

Details

max. 50 participants
Language: English

Lecturers

Classes (iCal) - next class is marked with N

midterm exam: 16.11.23 during class
final exam: 18.1.24 during class

  • Tuesday 03.10. 15:00 - 16:30 Seminarraum 16 Oskar-Morgenstern-Platz 1 3.Stock
  • Thursday 05.10. 09:45 - 11:15 Seminarraum 16 Oskar-Morgenstern-Platz 1 3.Stock
  • Tuesday 10.10. 09:45 - 11:15 Seminarraum 15 Oskar-Morgenstern-Platz 1 3.Stock
  • Tuesday 10.10. 15:00 - 16:30 Seminarraum 16 Oskar-Morgenstern-Platz 1 3.Stock
  • Thursday 12.10. 09:45 - 11:15 Seminarraum 16 Oskar-Morgenstern-Platz 1 3.Stock
  • Tuesday 17.10. 09:45 - 11:15 Seminarraum 15 Oskar-Morgenstern-Platz 1 3.Stock
  • Tuesday 17.10. 15:00 - 16:30 Seminarraum 16 Oskar-Morgenstern-Platz 1 3.Stock
  • Thursday 19.10. 09:45 - 11:15 Seminarraum 16 Oskar-Morgenstern-Platz 1 3.Stock
  • Tuesday 07.11. 15:00 - 16:30 Seminarraum 16 Oskar-Morgenstern-Platz 1 3.Stock
  • Thursday 09.11. 09:45 - 11:15 Seminarraum 16 Oskar-Morgenstern-Platz 1 3.Stock
  • Tuesday 14.11. 09:45 - 11:15 Seminarraum 16 Oskar-Morgenstern-Platz 1 3.Stock
  • Tuesday 14.11. 15:00 - 16:30 Seminarraum 16 Oskar-Morgenstern-Platz 1 3.Stock
  • Thursday 16.11. 09:45 - 13:00 Hörsaal 3 Oskar-Morgenstern-Platz 1 Erdgeschoß
  • Tuesday 21.11. 15:00 - 16:30 Seminarraum 16 Oskar-Morgenstern-Platz 1 3.Stock
  • Thursday 23.11. 09:45 - 11:15 Seminarraum 16 Oskar-Morgenstern-Platz 1 3.Stock
  • Thursday 30.11. 09:45 - 11:15 Seminarraum 6 Oskar-Morgenstern-Platz 1 1.Stock
  • Tuesday 05.12. 15:00 - 16:30 Seminarraum 16 Oskar-Morgenstern-Platz 1 3.Stock
  • Thursday 07.12. 09:45 - 11:15 Seminarraum 16 Oskar-Morgenstern-Platz 1 3.Stock
  • Thursday 14.12. 09:45 - 11:15 Seminarraum 16 Oskar-Morgenstern-Platz 1 3.Stock
  • Tuesday 09.01. 15:00 - 16:30 Seminarraum 16 Oskar-Morgenstern-Platz 1 3.Stock
  • Thursday 11.01. 09:45 - 11:15 Seminarraum 16 Oskar-Morgenstern-Platz 1 3.Stock
  • Tuesday 16.01. 15:00 - 16:30 Seminarraum 16 Oskar-Morgenstern-Platz 1 3.Stock
  • Thursday 18.01. 08:00 - 11:15 Hörsaal 15 Oskar-Morgenstern-Platz 1 2.Stock

Information

Aims, contents and method of the course

This course aims at both Economics as well as Philosophy&Economics students. 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. 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 without compromising predictive power.

Assessment and permitted materials

Exams will be open class notes. 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.
Rubinstein, A, and M. Richter (2020), The permissible and the forbidden, Journal of Economic Theory
188

Association in the course directory

Last modified: We 15.11.2023 08:27