Behavioral economics is the science of human decisions: How do we make the decisions we make, and why? What factors affect our decisions, and when? When, where, and how are our decisions affected?

Behavioral economics studies actual, real-world human behavior and decisions and shows how, when, and where they deviate from the "rational" decisions made by people traditionally assumed in economic theory.

Learn about the way people make decisions, why they are not always “rational” (in a traditional economics sense) but how "biased" decisions may still be optimal, even if people apply heuristics (“rules of thumb”). Apply this new knowledge to your own life and be not as easily persuaded by companies and governments, or at least have a better idea about why companies and governments use certain scents, colors, images, and ways to communicate with people.

Start first by learning about traditional economics theory. This theory is the basis of all economics research. Then you will learn about behavioral economics foundations and some theories. Following, you will learn about human decision heuristics and biases and how these may affect your daily decisions. Then, you will learn how companies and governments use behavioral economics (sciences) knowledge in the real world. Get acquainted with the tricks used by experts to influence your decisions and choices! Maybe even learn to recognize those and not to be so easily swayed by those techniques anymore?

Enjoy the journey diving into a fairly new economics discipline. And good luck!

Course outline

• Intro: What is behavioral economics (BE)? Locate BE within the social sciences.

• Economics foundations

  1. Utility, demand and supply, and expected utility theory

  2. Homo economicus: the traditional economics assumptions and key economics concepts

  3. Reviewing homo economicus assumptions and defending rationality

• Behavioral economics foundations

  1. Early survey responses

  2. Economics experiments and games

• Human decision-making

  1. Bounded rationality

  2. Dual system theory of thinking

  3. Prospect theory of decision-making

  • Probability-weighting function

  • Value function

  1. Regret theory of decision-making

  2. The fourfold pattern of decision-making

• Decision heuristics and cognitive biases

• Heuristics

  1. Representativeness

  2. Availability

  3. Anchoring & adjustment

  4. Affect

• Cognitive biases

  1. Mental accounting

  2. Hyperbolic discounting

  3. Loss aversion

  4. Endowment effect

  5. Scarcity bias

  6. And many more…

• Social norms and social preferences

• Behavioral economics frameworks

  1. EAST

  2. Double Diamond

  3. MINDSPACE

  4. COMBI / COM-B

• Behavioral economics in action

1. Choice architecture

2. Policymaking

3. Some real-world examples

• Wrap-up: Conclusion and takeaways.