DRE 7026 Topics in Behavioral and Experimental Economics
DRE 7026 Topics in Behavioral and Experimental Economics
This course provides a foundation in behavioral economics and the role of experimental
methods in economics.
After taking the course students should be able to apply rigorous models of behavioral
economics and techniques of experimental economics to analyze economic performance in
different institutional settings.
After taking the course students should be able to solve a set of models in behavioral
economics and to design and execute a simple economics experiment in the laboratory.
After taking the course the student should be able to constructively reflect on the value of
alternative assumptions in models of economics, and to be able to critically assess the value
of collecting data in randomized and highly controlled settings such as an economics
laboratory.
The traditional approach in economics is to explain market outcomes and economic
decision-making using simple theoretical models based on perfectly rational, self-interested
agents who maximise their well-being by carefully weighing up the costs and benefits of
different alternatives. Behavioral economics, on the other hand, aspires to relax these
stringent assumptions and develop an understanding of how people actually make
decisions. Analogously, experimental economics also contrasts with the approach that, until
recently, was more standard. lt uses laboratory techniques as a supplement or alternative to
drawing data exclusively from the field. The module will introduce students to behavioral
and experimental economics, discuss these fields from a methodological perspective and
examine several areas of economic analysis in which they are applied.
Lecture 1: The Methodology of experimental economics - Basics of economic experiements - Experimental control
Reading Material:
- Croson, R., and Gächter, S., (2010). The Science of Experimental Economics. Journal of Economic Behaviour and Organization, 73, 122-131.
- Falk, A., and Heckman, J.J., (2009). Lab experiments are a major source of knowledge in the social sciences. Science, 326, 535-538
Lecture 2: Ultimatum Games -Determinants of fairness behaviour - Cross-cultural differences in fairness norms
Reading Material:
- Güth, W., Schmittberger, R., and Schwarze, 8., (L982). An experimental analysis of
ultimatum bargaining, Journal of Economic Behavior and Organization, vol. 3, pp.
367-388. - Falk, A., Fehr, E., and Fischbacher, U., (2003). On the nature of fair behaviour,
Economic lnquiry, vol. 4L, pp. 20-26. - Henrich, J., Boyd, R., Bowles, S., Camerer, C., Fehr, E., Gintis, H., . . . Tracer, D. (2005).
"Economic man" in cross-cultural perspective: Behavioral experiments in l-5 smallscale
societies. Behavioral and Brain Sciences, 28(6), 795-815
Lecture 3: Bargaining with proposers' and responders' competition - Dictator games - Trust
games - Determinants of trust behavior
Reading Material:
- Roth, A. E., Prasnikar, V., Okuno-Fujiwara, M., and Zamir, S., (L991-), "Bargaining and market behavior in Jerusalem, Ljubljana, Pittsburgh and Tokyo: an experimental
study", American Economic Review, vol. 81-, pp. 1068-1095. - Forsythe, R., Horowitz,J., Savin, N., and Sefton, M., (1994). Fairness in simple
bargaining experiments, Games and Economic Behavior, 6, pp. 347-369. - Gneezy, U., Güth, W., and Verboven, F., (2000), "Presents or investment? An
experimental analysis", Journal of Economic Psychology, vol. 2L, pp.481,-493.
Lecture 4: Public goods games - Do people contribute? Why? - Explaining patterns of
cooperation
Reading Material:
- Andreoni, J., (L988). "Why free ride?: Strategies and learning in public goods
experiments", Journal of Public Economics , vol. 37 , pp. 291-304. - Keser, C., (1996). "Voluntary contributions to a public good when partial contribution
is a dominant strategy", Economics Letters 50, 359-366. - Fischbacher, U., Gächter, S., Fehr, E., (2001.). "Are people conditionally cooperative?
Evidence from a public goods experiment", Economics Letters, vol.71-, pp. 397-404.
Lecture 5: Public good games with punishment - Altruistic Punishment - Welfare
implications of punishment - Monetary vs. Non-Monetary punishment
Reading Material:
- Fehr, E., and Gächter, S., (2000). Cooperation and Punishment in Public Goods
Experiments, American Economic Review, vol.90, pp. 980-994. - Fehr, E., and Gächter, S., (2002). Altruistic Punishment in Humans, Nature, vol. 4l5,
pp. 137-140. - Gaechter, S., Renner, E., and Sefton, M., (2008). The long-run benefits of punishment, Science, vol..322, pp. 1510.
- Masclet, D., Noussair, C., Tucker, S., and Villeval, M-C., (2003). Monetary and Non-
Monetary Punishment in the Voluntary Contributions Mechanism, American
Economic Review, vol.93, pp. 366-380.
Lecture 6: Effectiveness of punishment - Third party punishment games
Reading Material:
- Nikiforakis, N., and Normann, H.-T., (2008). A comparative static analysis of
punishment in public good experiments, Experimental Economics, vol. 11, pp. 358-
369. - Nikiforakis, N. (2008). Punishment and counter-punishment in public good games:
Can we really govern ourselves?, Journal of Public Economics, vol.92, pp.91-1I2. - Hermann, 8., Thöni, C., and Gächter, S., (2008). Antisocial Punishment Across
Societies, Science, vol. 319, pp.1362-1367. - Fehr, E., and Fischbacher,U., (2004). Third-party punishment and social norms.
Evolution and Human Behavior, vol. 25, pp. 63-87.
Lecture 7: Emotions and Economic Decision Making
Reading Material:
- Drouvelis, M., & Grosskopl B. (2016). The Effects of lnduced Emotions on Pro-Social
Behaviour, Journal of Public Economics, vol. 134, pp. 1-8. - Xiao, E., and Houser, D., (2005). Emotion expression in human punishment behavior,
Proceedings of the National Academy of Sciences , vol. 102, pp.7398-7401.
Lecture 8: Framing Effects
Reoding Material:
- Andreoni, J., (1995). Warm-glow versus cold-prickle: The effects of positive and
negative framing on cooperation in experiments. QuarterlyJournalof Economics, vol.
CX, pp. 1-21. - Cubitt, R., Drouvelis, M., and Gächter, S., (2011). Framing and free riding: emotional
responses and punishment in social dilemma games. Experimental Economics, vol.
14, pp.254-272. - Park, E-S., (2000). Warm-glow versus cold-prickle: a further experimental study of
framing effects on free-riding, Journal of Economic Behavior & Organization, vol. 43,
pp.405-421,
Enrollment in a PhD programme is a general requirement for participation in PhD courses at BI Norwegian Business School.
External candidates are kindly asked to attach confirmation of enrollment in a PhD programme when signing up for a course. Other candidates may be allowed to sit in on courses by approval of the course leader. Sitting in on a course does not permit registration for the course, handing in exams or gaining credits for the course. Course certificates or confirmation letters will not be issued for sitting in on courses.
| Assessments |
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Exam category: Submission Form of assessment: Written submission Weight: 100 Grouping: Individual Duration: 1 Month(s) Exam code: DRE 70261 Grading scale: Pass/fail Resit: Examination when next scheduled course |
A course of 1 ECTS credit corresponds to a workload of 26-30 hours. Therefore a course of 3 ECTS credit corresponds to a workload of at least 80 hours.