Economics, primarily microeconomics, is the primary theoretical language underlying a business education. Even if economic theory is not referenced explicitly, its assumptions guide most of how you are taught to think about behavior in the marketplace and the workplace. It is so ubiquitous that most students do not even realize the power it has over how we think about business.
What are those economic assumptions, exactly? Do they always hold? What explains behavior when these assumptions do not hold? These questions form the basis of the study of the psychology of economic behavior, “Behavioral Economics.”
There are three primary components to the pedagogy of this class:
- Economic Principles: We will clarify what economic principles do (and do not) say about human behavior and how these principles drive business research and assumptions,
- Behavioral Economics Research: We will then learn how to augment economic principles with the extant behavioral economics literature and then
- Primary Research: Within a group, we will conduct original behavioral economics studies.
After completing this class, you will
- know the primary behavioral economics findings most important for an MBA education,
- be able to read and evaluate behavioral economics research evidence that you encounter in the future, either in your own or others’ research, and
- have experience gathering and analyzing experimental data about human behavior.
Reading Materials
Books
There are three required books for the course:
- Thinking Fast and Slow (2011) by Daniel Kahneman (publisher Farrer Straus and Giroux),
- Nudge: Improving Decisions about Health, Wealth, and Happiness (2009), Richard Thaler and Cass Sunstein (publisher Penguin).
- And: A Course in Behavioral Economics (2016, 2nd Edition) by Erik Angner (publisher Palgrave Macmillan). Do not buy this book—I will put the required readings on Canvas. You will just skim these readings.
I denote these readings as TFS, Nudge, and CBE in the syllabus. Feel free to buy whatever version of any of the books you like, including used or Kindle versions.
Thinking Fast and Slow is an international bestselling, multi-award winning book by one of the founders of behavioral economics and a Nobel winner in economics (in 2002). He is a psychologist by training. There is a new edition, but this one is easier and cheaper to find and I can catch you on anything crucial in the newest one.
Nudge: Improving Decisions about Health, Wealth, and Happiness is another bestseller that has won many awards. It is a much less dense book than TFS, and is written for a general educated audience. Richard Thaler is has an economics and policy background, as is another of the founders of behavioral economics. Cass Sunstein is a law professor at Harvard with considerable experience merging behavioral science and law. Dr. Thaler also won the economics Nobel, in 2017.
A Course in Behavioral Economics is an excellent textbook on the subject. Angner is a Ph.D. Economist and unlike many such books, the book is well grounded in economic theory, and the writing is very precise. In addition to being an economist, has a Ph.D. in History and Philosophy of Science. I will put the readings from this book on Canvas for you; there is a new edition but it is optional so I do not feel you must buy it.
Readings
In addition to the above readings, I will assign journal articles and other readings about research (such as book chapters) throughout the semester. I would like you to leave the course with competency at reading journal articles so that you can use them in your future work.