Online Course Behavioral Economics
Peter P. Wakker
Erasmus University Rotterdam
 Topics: behavioral economics, its history, concepts, and theory based on empirical findings; less focus on empirics
 Nature: broad & concise; not deep;
alternative course, deep and focussing on risk/uncertainty, is
here
 Primary audience: master students in economics;
further: psychology, business, finance, health, math
 Textbook: given novelty, none. Slides, provided below and written for this purpose, serve as substitute
 Prerequisits: only basic knowledge of probability theory;
useful: microeconomics on individual choice & ability to read formulas; some game theory, but can be skipped if not interested
 Course load: 1.5 ECT credits

Short topics of independent interest
Given broadness, many topics can be studied on their own, independently of the rest. Those topics include: ordinal revolution in economics, Allais paradox, Ellsberg paradox, Arrow voting paradox, time inconsistency, preference reversals, emotions in game theory, prospect theory, FehrSchmidt inequality aversion, Kahneman’s experienced utility, happiness, WTPWTA discrepancy.
Material used
Specification of material to be studied
The material to be studied is specified in detail below, organized as homework for three meetings. Exercises are in the file linked above.
Advice: try to solve exercises yourself before inspecting solutions. If you can't solve an exercise, don't look at solutions yet, but search in the theory to find your lack of knowledge. This searching is the most useful stage of learning.
1^{st} meeting
Topics:
ordinal foundation of economics in 1930s; its first successes: behavioral foundations of preference, utility, expected utility, discounted utility, utilitarianism;
empirical problems; biasesheuristics
Material (homework for 2^{nd} meeting):
study Chs. 13 of the powerpoint slides, linked above, and the
recordings for 1^{st} meeting.
Exercises: 1.4.2, 1.4.4, 1.5.2, 1.6.1, 1.6.2, 1.7.1, 2.3.1, 2.4.1, and 2.5.1
Solutions to these exercises
2^{nd} meeting
Topics:
most mathematical meeting; many behavioral theories for risk, time, and interpersonal
Material (homework for 3^{rd} meeting):
study the powerpoint slides up to and including Ch. 5, and the
recordings for 2^{nd} meeting.
Exercises: 3.2, 4.2.1, 4.2.2, 4.2.3, 4.3.1, 4.3.2, 4.5.3, 4.6.1, 5.4.1
Solutions to these exercises
3^{rd} meeting
Topics:
welfare theories; behavioral theories applied to game theory, risky choices, discounting and selfcontrol; framing, and more fundamental breakaways from revealed preference
Material (final homework:
study the powerpoint slides and
recordings for 3^{rd} meeting.
Skip: §8.2 (Quantal response equilibrium). Also study the solution to Exercise 3.2.
Exercises: 4.5.1, 4.5.2, 5.2.1, 5.3.1, 5.3.2, 6.1.1, 8.1.1, 12.1.1
Solutions to these exercises