Behavioural economics is an increasingly important part of modern policy analysis and economics. It allows policy makers to use psychological insights to increase the explanatory power of economic analysis.
The objective of this course is to provide participants with an appreciation of the principles of behavioural economics and demonstrate how these principles can be used in public policy analysis. To do this the course will help participants understand:
• the strengths and limitations of the standard model of economics (e.g., expected utility or exponential discounting) and how alternative models informed by behavioural economics (e.g., prospect theory or present bias) complement and extend these classical theories;
• the main principles of behavioural economics and how they apply to policy problems, such as: choice under uncertainty (risk preferences); choice over time (time preferences); choice over interpersonal allocations (social preferences); and judgment under uncertainty (probability assessments); and
• how to apply these principles to policy analysis through the use of empiricism and evaluation.
Detailed case studies will be reviewed with practical frameworks that participants will be able to use by the end of the course.