Reasoning and decision-making

Description

In this course we introduce the field of behavioral and experimental economics from a historical and methodological perspective. We then discuss various models of decision making in both non-strategic and strategic environments. The former will be based on the literature and recent advancement of Decision Theory, the latter will be based on Game Theory. In discussing these models, we will refer to the experimental literature that has tested the implications of these models, and motivated new theoretical developments. Furthermore, we will also discuss findings from the literature on heuristics used in decision making. The course adopts an hands-on training approach. Some lectures will be given at the CoCoLab experimental laboratory. Students will participate to ad hoc laboratory experiments and will be encouraged to discuss about the outcomes of the experiments.
 

Requirements

  • Notions of game theory
  • Notions of statistics and probabilitySaisissez ici le titre ici

Syllabus

PART 1 (Agnès FESTRÉ): THE COGNITIVE/EXPERIMENTAL TURN IN ECONOMICS
Lecture 1. History and evolution of the relation between psychology and economics
Lecture 2. Economic experiments: methodological issues and debates
Lecture 3. Behavioral economics: theoretical foundations and their operationalization into public policies    
PART 2 (Giuseppe ATTANASI): PSYCHOLOGICAL AND SOCIAL « BIASES » IN INDIVIDUAL AND STRATEGIC DECISION MAKING
Lecture 4. Psychological bias and heuristics in choice under risk
Lecture 5. Psychological bias and heuristics in choice under ambiguity
Lecture 6. Social preferences in strategic decision making
PART 3 (Eric GUERCI): AN « UNHORTODOX » VIEW ON REASONING AND DECISION MAKING
Lecture 7. The three major types of reasoning: deductive / inductive / abductive.
Lecture 8. Trade-off between stability and variability in the decision making and the role of emotions.
Lecture 9. Human vs Artificial: from prediction to decision-making.
Teacher Face to face hours Working hours ECTS
Giuseppe Attanasi
Agnès Festré
Eric Guerci		 30 60 6

Grading

Group assignment (Group Task) with a presentation (possibly during a Friday Meeting) – 25% of final mark
Written exam – 75% of final mark
 

References :

  • Guala, F., Mittone, F. (2002). Experiments in Economics: Testing Theories vs. the Robustness of Phenomena. CEEL WP.
  • Hertwig, R., Ortmann, A. (2002). Experimental practices in economics: A methodological challenge for psychologists? Behavioral and Brain Sciences 24: 383-451.
  • Lee Kyu Sang (2011). Three ways of linking laboratory endeavours to the realm of policies. The European Journal of the History of Economic Thought 18(5): 755-776.
  • Sent, E-M. (2004). Behavioral Economics: How Psychology Made its (limited) Way Back into Economics. History of Political Economy 36(4) : 735-760.
  • Barrett, L. F. (2017). How emotions are made: The secret life of the brain. Houghton Mifflin Harcourt.
  • Kahneman, D. (2011). Thinking, fast and slow. Farrar, Straus and Giroux.
  • Agrawal, A., Gans, J., & Goldfarb, A. (2018). Prediction machines: The simple economics of artificial intelligence.
  • Johnson-Laird, P. N. (2001). Mental models and human reasoning. In E. Dupoux (Ed.), Language, brain, and cognitive development: Essays in honor of Jacques Mehler (p. 85–102). The MIT Press.