APPLIES TO ACADEMIC YEAR 2014/2015

ELE 3758 Economic decisions, innovation and happiness

Responsible for the course
Atle Raa

Department
Department of Innovation and Economic Organisation

Term
According to study plan

ECTS Credits
7,5

Language of instruction
Norwegian

Introduction
The psychologist Daniel Kahneman won the Nobel Memorial Prize in Economics in 2002. He is known to have developed what is called prospect theory. Much of his research is summarized in the book Thinking, fast and slow. It is found today in almost any bookstore, and provides an easy, yet thorough overview of Kahneman's own work, as well as other contemporary research on how we think and make choices or decisions in matters of financial and other character in the community.

The aim of the course is to explain the consequences Kahneman's and other similar theories have our views on what creates economic development and social welfare. One puts special emphasis on Kahneman's work, but also bring up other work that is related to this topic.

Learning outcome
Acquired Knowledge
After the course students should have:

• Established knowledge of what are the fundamental features of prospect theory.
• Acquired knowledge of assumptions about behavior that lies behind the actions of markets , including full and limited rationality and the role that economic and social incentives can play.
• Gained an understanding of how these modern theories provides a different approach to how we make economic decisions than those underlying the orthodox economic theory.
• Developed an understanding of the consequences this has for Entrepreneurship and Innovation
• Acquired knowledge of the ongoing debate about nudging, so it takes place in the U.S. and other countries
• Established knowledge of the discussion about the relationship between economic welfare and happiness

• Discuss economic issues and consider what actions may be reasonable in light of Kahnemans perspectives.
• Assess and discuss what might be the strengths and weaknesses set out in Kahnemans theory.
• Explain how this theory has relevance for entrepreneurship and innovation
• Reflect on the relationship between economics and the nowadays highly publicized happiness research

• Students will develop an awareness of the importance of economic institutions , economic organization and economic behavior of communities, businesses and individuals in the community.
• Students will develop the ability of using the theory and practical knowledge in combination to reflect on what are the implications for society , business and individuals of various forms of economic organization and human behavior in markets.

1. Kahnemans two systems of how we make decisions.
2. Consequences of using different heuristics in economic contexts.
3. The significance of different assumptions about behavior in terms of the economy, including in entrepreneurship and innovation
4. 'Econ' and 'humans' as personality types in society.
5. Decision architecture and nudging
6. Can happiness be measured? Economy and happiness.