Next >

Behavioural Economics and Experiments

How we decide Introduction Descartes’s error?How do economists and psychologists approach decision making?Infusing psychology into economics: the guessing game Types of decision making Ana’s problem of choice Ana cannot buy everything she wants; her choices are constrained Ana knows what she can afford, but how does she choose among these?Ana knows what she can afford and how she should choose. What should she buy?Two examples of how to use this tool How realistic is this “normative” model? Let’s look inside the brain Concluding remarks Notes Experiments in behavioural economics Introduction The rise of experimental economics Elements of experimental design A brief history of experimental economics Experiments in economics and psychology: similarities and differences Criticisms of experimental economics In lieu of a conclusion: experimental economics: the path forward Notes Gut feelings and effortful thinking Introduction The power of gut feelings, or System 1 thinking Limits to System 1 thinking and the need to engage System 2 Why do we need to worry about Systems 1 and 2?Choice over time: smaller–sooner versus larger–later rewards Concluding remarks Notes Expected utility theory and prospect theory Introduction Risk neutrality and risk aversion The Allais Paradox Prospect theory Explaining the paradoxical behaviour in Allais and elsewhere Loss aversion, mental accounting and the endowment effect Loss aversion and overconfidence Concluding remarks Notes Probabilistic thinking Introduction Probabilities are dicey and often hard to get our heads around One further detour on the way to the jury decision-making problem Back to the jury decision-making problem Michael Bloomberg’s stop-and-frisk policy Indira, the mature mother Dependent or independent? Connected or unconnected? Conjunctive and disjunctive fallacies Regression to the mean Concluding remarks Notes Thinking strategically Introduction The prisoner’s dilemma Yossarian and Nately’s choices revisited Prisoner’s dilemma in the animal world Tit-for-tat strategies in prisoner’s dilemma games Let us talk of Yossarian and Nately one last time Men are from Mars, women are from Venus: battle of the sexes Battle of the sexes: the game played by Della and Jim Hunt a stag or a rabbit? The stag hunt game and pay-off-ranked equilibria Please, why don’t you go first? Games where players move in sequence Concluding remarks Notes The ultimatum game The ultimatum game Intentions, as well as outcomes, matter Criticisms of the findings of Güth and his colleagues Behaviour in the ultimatum game: fairness or altruism?Raising the monetary stakes in the ultimatum game Fear of punishment or fear of embarrassment?Do norms of fairness differ across cultures?An even more ambitious cross-cultural study Concluding remarks Notes Market implications of the ultimatum game Introduction Fairness as a constraint on profit-making Economic consequences of norms of fairness Fairness and inequality Concluding remarks Note Trust and trustworthiness in everyday life Trusting strangers Is trust nothing but altruism? How about reciprocity?The role of expectations in the decision to trust Is a trusting decision analogous to a risky one?Do trust and trustworthiness go together?Does trust pay?Concluding remarks Notes Trust and trustworthiness in markets Introduction Trust and trustworthiness in agency relationships Further economic implications of fairness and trust The Grameen Bank experience Extrinsic incentives can crowd out intrinsic motivations Intrinsic motivations, sustainability and climate change Extrinsic incentives and crowding out of intrinsic motivations Trust and growth Concluding remarks Notes Cooperation in social dilemmas An example of a social dilemma Are smaller groups better at addressing collective action problems?Are contributions caused by confusion on the part of the participants?Looking for alternative explanations Do participants display a herd mentality?Turning the prisoner’s dilemma into a stag hunt game Concluding remarks Notes The carrot or the stick: Sustaining cooperation in social dilemmas Introduction Sustaining social norms by punishing free-riders On the cost effectiveness of costly punishments The possibility of “perverse” punishments Are punishments more effective in the long run?The “verdict” on costly punishments Sustaining cooperation via means other than punishments Sustaining cooperation in non-sorted groups Cooperation in sorted groups An intergenerational approach to cooperation Concluding remarks Notes I will if you will: Resolving coordination failures in organizations Coordination failures in real life Experimental evidence on coordination failures The minimum effort coordination game Talk is cheap; or is it? Using communication to resolve coordination failures Money talks: the role of incentives When in Rome … creating culture in the laboratory From the laboratory to the real world: do these interventions work? The story of Continental Airlines From the real world, back to the laboratory: are you partners or strangers?Concluding remarks Notes Behavioural analyses of markets Introduction Demand Supply The theory of competitive equilibrium Consumer and producer surplus But … does it work in real life?Robustness of the market equilibration process Posted offer markets Posted offer markets and market power Fairness in posted offer markets revisited Policy interventions in markets Concluding remarks Notes Asset bubbles in markets Introduction Studying asset bubbles in the lab I don’t understand why the fundamental value is declining!Rational speculation and the role of expectations Unleashing (and leashing) our animal spirits Passions within reason: the role of experience in curbing bubbles Concluding remarks Notes

Next >