Overview
Description
This course examines the history, ideas, and applications of Behavioral Economics and Finance. It examines the heuristics and biases of decision making at both the microeconomic and macroeconomic levels.
Units
Lecture3
Catalog Details
Offering
Offered: Every Spring
Terms
spring
Attributes
Standard
Learning Outcomes
- identify key ideas in the history of Behavioral Economics and Behavioral Finance.
- identify the mental shortcuts that humans, in general, and market participants, in particular, typically rely upon.
- demonstrate understanding that mental shortcuts, also called heuristics, are used because they are ecologically rational (i.e, frugal and useful, on average, in a given environment) even if they are not generally valid across all environments.
- distinguish the concept of (generic) rationality from environment-specific rationality (or ecological rationality).
- recognize the downsides of applying ecological rationality.
- recognize behavioral and cognitive biases that arise as a consequence of the application of mental shortcuts.
- connect the presence of behavioral and cognitive biases with the existence of financial crises.
- analyze situations using concepts and models from behavioral finance & economics.