In this course, we will read and discuss papers about the psychological factors that underpin decision-making, focusing on decisions taken when interacting with others.
The course will have three parts:
1. An introduction to decision theory and behavioural economics
Behavioral game theory is a subfield of behavioral economics, in which behavior is analyzed in terms of the costs and benefits it brings about. We will dedicate the first sessions to explaining the framework and its key notions, such as ‘bounded rationality’ and ‘cognitive biases’
2. Studies on other-regarding preferences
We will then look at choices in strategic contexts: that’s where game theory is relevant, because the benefits of the choices made also depend on what others’ choose. We will see that these decision depend on social preferences, which we will attempt to specify.
3. Studies on strategic decision making
The decisions taken when interacting with others also depend on how others are predicted to behave. We will investigate how these predictions are formed and their effects on decision-making.