Understanding people’s motivations (altruism, reciprocity, inequality aversion as well as self-interest) is essential to being able to predict economic behavior. Experiments are a tool so that people’s behavior can be observed under controlled conditions. In this course, we develop and deepen students’ understanding of the experimental method of investigation in economics. Furthermore, we survey research which incorporates behavioral and psychological evidence into economics based on empirical observations from the lab and from the field. We also consider the implications of the modified models for market outcomes and public policy. Topics include (but are not limited to) fairness, altruism, and reciprocity; preferences for redistribution; heuristics and cognitive biases; nudging; and social identity.

Students will learn how experiments do help us understand the real economic world. They will be familiar with aspects of design, implementation, and evaluation of experiments, enabling them to elaborate, implement, and analyze an experiment in the lab or in the field. Students will learn how psychological, cognitive, and social factors affect the economic decisions of individuals and institutions, the consequences of such factors for market outcomes, efficiency and allocations, and their policy relevance.

Attendance is compulsory.

Lectures, homework, exams

• Mid-term exam 40%
• Homework assignments 20%
• Final exam 40%

Knowledge of microeconomics and statistical (econometric) methods