Universität Wien FIND

390037 SE PhD-VGSE: Behavioral Theory and IO Applications (2019W)

Continuous assessment of course work

Students may apply for this course by sending an email to info@vgse.at including their CV, transcript (Sammelzeugnis) and optionally a recommendation of their thesis advisor.

More information at www.vgse.at



max. 25 participants
Language: English



Monday, September 30, 10.15 - 11.45 and 14.15 - 15.45 h
Tuesday, October 1, 10.30 - 12.00 and 14.30 - 16:00 h
Wednesday, October, 2, 10:15 - 11.45 and 14.30 - 16.00 h
Monday, November 18, 10.15 - 11.45 and 14.15 - 15.45 h
Tuesday, November 19, 10.30 - 12.00 and 14.15 - 15.45 h
Wednesday, November 20, 14.45 - 16.15 h
Friday, November 22, 10:15 - 11:45

Doctoral Colleg Seminarroom, 3rd floor


Aims, contents and method of the course

Based largely on a recent survey titled “Behavioral Industrial Organization” that Botond Kőszegi and I wrote for the Handbook of Behavioral Economic, this short course familiarizes students with this quickly developing field of research. Broadly speaking, behavioral industrial organization analyzes the implications of behavioral-economic models of individual decisionmaking for the functioning of markets. To do so, we will introduce and discuss some basic behavioral theories of individual behavior throughout the course as needed. The primary focus of this short course, however, lies on how rational firms exploit consumers tendencies to make systematic mistakes when evaluating contracts or products. But we will also talk about how rational firms respond to consumer preferences that differ from those typically imposed in classical economics, and how this impacts observable market outcomes. In addition, we will touch on how psychological tendencies affect firm behavior – a newly developing subfield. Throughout, we will critically discuss the policy insights that follow from the behavioral-industrial-organization models discussed in class.

Prerequisites: Participants are expected to have a solid (Master-level) background in microeconomic theory, especially game theory and (simple) models of imperfect competition. Basic familiarity with behavioral-economic models of individual decision making is, of course, helpful but not required.

Aims: The course aims to familiarize students with the fast growing subfield of behavioral industrial economics, and give students the ability to critically evaluate research papers and ideas within the field of behavioral economics more generally.

Method: The class is based on a series of lectures. The slides for these lectures will be handed out to students for further self-study of the material.

Assessment and permitted materials

Students have to write two referee reports on current research papers in the field, which then will be discussed on class. In addition, they have to hand in two exercise sheets.

Minimum requirements and assessment criteria

- Two referee report
- Two exercise sheets
- active participation in class

Examination topics


1. Introduction
2. Basic Economics of Hidden Prices
3. Excursion 1: Quasi-hyperbolic Discounting and Naivete
4. Application: Consumer Naivete in the Credit Market
5. Hidden Prices and Exploitative Distortions
6. Naivete-based Price Discrimination
7. Perception Externalities: Consumer Education
8. Perception Externalities: Obfuscation
9. Excursion 2: Reference-dependent Preferences and Loss Aversion
10. Consumer Loss Aversion and Pricing
11. Behavioral Firms
12. Wrap-up

Reading list

The course will roughly follow the organization of the survey article “Behavioral Industrial Organization” that Botond Kőszegi and I wrote for the Handbook of Behavioral Economics. There is also a comprehensive graduate textbook “Bounded Rationality and Industrial Organization” by Ran Spiegler (2011, Oxford University Press). This book is focused more on the theoretical issues at play than we will do in the course, but is extremely useful if you plan to do research in the field. Other, topic-specific readings will also be listed on the lecture slides, and many more are contained in the overview article the class is based on.

Association in the course directory

Last modified: Th 26.09.2019 12:10