Economic Theories of Decision Making




Prof. Ivan Moscati


Office hours: by appointment





The course covers the main orthodox and behavioral theories of decision-making used in economics. The focus is on theories of individual decision-making in risk-free, risky and intertemporal contexts (strategic decisions, i.e. game theory, and collective decisions related to social welfare are not discussed). After a historical introduction to the subject (lecture 1), I first discuss the orthodox theories of decision-making (lectures 2, 4, 6), and then move to their behavioral counterparts (lectures 3, 5, 7).


1: Introduction & Historical Background


Decision-Making under Certainty

2: Rational Choice Theory

3: Bounded-Rationality Models


Decision-Making under Risk and Uncertainty

4: Expected Utility Theory

5: Prospect Theory, Rank-Dependent Utility Theory, & Cumulative Prospect Theory


Intertemporal Decision-Making

6: The Discounted Utility Model

7: The (𝛽, δ) Model



Written exam; open questions and exercises. Duration: 90 minutes; date: January 8, 2018.

Grades: failure (<18/30); pass (18-26/30); pass with distinction (27-30/30).


Reading materials

MAS-COLELL, A., WHINSTON, M.D., & GREEN, J.R. Microeconomic Theory, Oxford University Press 1995, chapters 1-3 & 6.

ANGNER, E. Behavioral Economics, 2nd edition, Palgrave 2016, chapters 1-3 & 6-9.

MOSCATI, I. From Classical Political Economy to Behavioral Economics, Egea 2012, chapters 2-4, and 10-11.

Further reading materials will be posted in a Dropbox file you will be invited to. The relevant books can be found at the university library (, or can be bought in the internet (;



Council room (Sala Consiglio), Department of Economics, Via Monte Generoso 71, first floor.