Economic Theories of Decision Making

ECONOMIC THEORIES OF DECISION-MAKING

  

Instructor

Prof. Ivan Moscati

Web: www.uninsubria.it/docenti/ivan.moscati

Office hours: by appointment

Email: ivan.moscati@uninsubria.it

 

SYLLABUS

Topic

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

 

Evaluation

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 (www.uninsubria.it/web/biblioeco), or can be bought in the internet (www.amazon.it; www.egeaonline.it).

 

Venue

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