Overview
Description
This course examines the applications of Behavioral Economics to Macroeconomics and Financial Economics. The heuristics and biases of decision making are examined at both the microeconomic and macroeconomic levels but with a focus on macro and financial applications. Laboratory experiments on asset allocation decisions are studied. Students will design their own laboratory experiments.
Requirements
Prerequisites
ECON 703
Original catalog text
Prerequisites
Prerequisite(s): ECON 703.
Units
Lecture3
Catalog Details
Offering
Offered: Every Spring - Even Years
Terms
spring
Attributes
Standard
Learning Outcomes
- identify key ideas in Behavioral Economics as they apply to Macroeconomics and Financial Economics.
- identify the mental shortcuts that humans, in general, and market participants, in particular, typically rely upon.
- explain 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 upsides & downsides of applying ecological rationality.
- recognize the different kinds of bounded rationality along the spatial, time and risk domains.