Spring 2015, 219B - Applications of Psychology and Economics


Wednesday 12n - 3:00 pm


515 Evans Hall
Office Hours: 
Thursday 12:00 - 2PM

Course Description

This course is the continuation of the 219A class in Psychology and Economics – Theory. As in 219A, we will keep emphasizing the psychological evidence as the basis for sound economic analysis. We will also insist on the importance of neoclassical theory as a successful benchmark that you are required to know. Finally, several topics of this course are designed to be the empirical counterpart of the theory covered in 219A.

Lecture Notes

Outline 1. Introduction 2. Psychology and Economics: The Topics 3. Psychology and Economics: Empirical Methods 4. Psychology and Economics by Field 5. Methodology: Reading the Psychology Journals 6. Defaults and Retirement Savings: The Facts 7. Comparison to Effect of Financial Education
Outline 1. Default Effects and Present Bias 2. Default Effects in Other Decisions 3. Default Effects: Alternative Explanations 4. Present Bias and Consumption 5. Investment Goods: Homework 6. Investment Goods: Exercise 7. Investment Goods: Work Effort
Outline 1. Investment Goods: Work Effort 2. Leisure Goods: Credit Card Borrowing 3. Leisure Goods: Consumption and Savings 4. Leisure Goods: Commitment and Savings 5. Leisure Goods: Drinking 6. Methodology: Commitment Field Experiments 7. Laboratory Experiments on Present Bias 8. Methodology: Errors in Applying Present-Biased Preferences 9. (Seven More Applications of Present Bias)
Outline 1. Laboratory Experiments on Present Bias II 2. Methodology: Errors in Applying Present-Biased Preferences 3. Reference Dependence: Introduction 4. Reference Dependence: Housing I 5. Methodology: Bunching-Based Evidence of Reference Dependence 6. Reference Dependence: Housing II 7. Reference Dependence: Tax Elusion 8. Reference Dependence: Goals 9. Reference Dependence: Mergers
Outline 1. Reference Dependence: Labor Supply 2. Reference Dependence: Equity Premium 3. Reference Dependence: Job Search 4. Reference Dependence: Endowment Effect I 5. Reference Points: Forward vs. Backward Looking 6. Reference Dependence: Disposition Effect (EXTRA)
Outline 1. Reference Dependence: Employment and Effort 2. Reference Dependence: Domestic Violence 3. Reference Dependence: Insurance 4. Methodology: Effect of Experience (EXTRA)
Outline 1. Social Preferences Wave I: Altruism 2. Workplace Effort: Altruism 3. Shaping Social Preferences 4. Social Preferences Wave I: Warm Glow and Charitable Giving 5. Social Preferences Wave II: Inequity Aversion and Reciprocity 6. Workplace Effort: Inequity Aversion 7. Methodology: Field Experiments
Outline 1. Workplace: Gift Exchange 2. Charitable Giving: Gift Exchange 3. Social Preferences Wave III: Social Pressure and Signalling 4. Social Pressure I 5. Social Pressure II: Charitable Giving
Outline 1. Social Pressure II: Charitable Giving 2. Signaling 3. Non-Standard Beliefs 4. Overconfidence 5. Law of Small Numbers 6. Projection Bias
1. Projection Bias 2. Non-Standard Decision-Making 3. Attention: Introduction 4. Attention: Simple Model 5. Attention: eBay Auctions 6. Attention: Taxes 7. Attention: Left Digits 8. Attention: Financial Markets 9. Methodology: Portfolio Methodology
Outline 1. Framing 2. Menu Effects: Introduction 3. Menu Effects: Choice Avoidance 4. Menu Effects: Preference for Familiar 5. Menu Effects: Preference for Salient 6. Menu Effects: Confusion 7. Persuasion 8. Emotions: Mood 9. Menu Effects: Excess Diversification (EXTRA)
Outline 1. Emotions: Mood 2. Emotions: Arousal 3. Methodology: Lab and Field Experiments 4. Happiness 5. Market Reaction to Biases: Introduction 6. Market Reaction to Biases: Pricing
Beyond Happiness and Satisfaction: Toward Well-Being Indices Based on Stated Preference
Outline 1. Market Reaction to Biases: Pricing II 2. Methodology: Markets and Non-Standard Behavior 3. Market Reaction to Biases: Behavioral Finance 4. Market Reaction to Biases: Corporate Decisions 5. Market Reaction to Biases: Employers 6. Market Reaction to Biases: Political Economy II 7. Happiness II
Assessing the Use of Happiness Survey Responses as Utility Proxies
Outline 1. Behavioral Public Economics 2. Market Reaction to Biases: Political Economy II 3. Methodology: Structural Behavioral Economics 4. Welfare Response to Biases 5. Concluding Remarks 6. Teaching Evaluation