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Decision Theory and Behavioural Economics - Structure
Decision Theory and Behavioural Economics - Structure

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ANTONIO FILIPPIN , responsible for the course

Degree in FINANCE AND ECONOMICS (MEF) - Classe LM-16 Enrolled from 2017/2018 academic year - Laurea Magistrale - 2018/2019

Compulsory course or activityyes
Year of course2s
Term or semester1st term
Scientific fields (settori scientifico-disciplinari)
  • SECS-P/02 - Politica economica
ECTS credits (CFU) compulsory6
ECTS credits - facultative-

General information

Aims and objectives: The aim of this course is first to provide a grounding in the area of decision under risk adopting standard economic models. Using experimental evidence that shows how such models may miss some important features of decision making, the course will then present models that have been developed to reconcile the theory with the experimental evidence.

Language of instruction: English

Syllabus

Syllabus: Objective and Subjective Uncertainty
Expected utility theory
Risk Aversion, certainty equivalent, risk premium.
Measurement of Risk Attitudes: Theory (Arrow-Pratt etc.)
Measurement of Risk Attitudes: Experiment (Comparison, Gender)
Risk and returns: stochastic dominance
State dependent utility
Expected utility: violations and paradoxes
Perception of probabilities: Probability weighting
(Cumulative) Prospect Theory
Reference dependent preferences
Time preferences and hyperbolic discounting,
Impulsivity
Self-Control and Temptation a la Gul-Pesendorfer
Myopic Loss Aversion
Assets and Bubbles
Disposition Effect

Syllabus - non-attending students: Objective and Subjective Uncertainty
Expected utility theory
Risk Aversion, certainty equivalent, risk premium.
Measurement of Risk Attitudes: Theory (Arrow-Pratt etc.)
Measurement of Risk Attitudes: Experiment (Comparison, Gender)
Risk and returns: stochastic dominance
State dependent utility
Expected utility: violations and paradoxes
Perception of probabilities: Probability weighting
(Cumulative) Prospect Theory
Reference dependent preferences
Time preferences and hyperbolic discounting,
Impulsivity
Self-Control and Temptation a la Gul-Pesendorfer
Myopic Loss Aversion
Assets and Bubbles
Disposition Effect

Short course description english flag

The course will mainly focus on decision under risk. After presenting the Expected Utility model, we will analyze regular failures in the empirical prediction of this model emphasized by well-known paradoxes as well as experimental evidence. We will then present the Prospect Theory model that has been developed to better describe the human behavior in decisions under risk.
The course will also present other models in the realm of Behavioral Economics, investigating for instance intertemporal decisions.
The course will also deal with related empirical issues, such as the measurement of risk and time preferences, as well as with applications of the aforementioned models in economics and finance (among the others: impulsivity and self-control, myopic loss aversion, bubbles, disposition effect).

Readings: The course will be based mainly on academic papers.
Useful textbook for part of the course (but that I do not suggest to buy in advance) are:
“Notes on the Theory of Choice” by David Kreps
“Advances in Behavioral Economics’’ by Colin Camerer, George Loewenstein and Matthew Rabin
"Microeconomics" by Andreu Mas-Colell, Michael D. Whinston, and Jerry R. Green

Readings - non-attending students: The course will be based mainly on academic papers.
Useful textbook for part of the course (but that I do not suggest to buy in advance) are:
“Notes on the Theory of Choice” by David Kreps
“Advances in Behavioral Economics’’ by Colin Camerer, George Loewenstein and Matthew Rabin
"Microeconomics" by Andreu Mas-Colell, Michael D. Whinston, and Jerry R. Green

Prerequisites, exams and assessment

Examunico
Type of assessmentEsame
Assessmentvoto verbalizzato in trentesimi

Prerequisites, exams and assessment Microeconomics; Quantitative methods.
The exam consists of mutiple choice questions, one open question, and two exercises.

Prerequisites, exams and assessment - non attendant students Microeconomics; Quantitative methods.
The exam consists of mutiple choice questions, one open question, and two exercises.

Structure of the course

Scientific fields

  • SECS-P/02 - Politica economica - Credits: 6
Activities

Esercitazioni: 40 hours

Lezioni: 20 hours

Teachers ' office hours

Teacher's office hours
TeacherOffice location
ANTONIO FILIPPIN , responsible for the courseLunedi 9:30-12:30.DEMM stanza 4