Economics and psychology

Lectures: 3 sessions / week, 1.5 hours / session

Recitations: 1 session / week, 1 hour / session

Prof. Xavier Gabaix

Traditional economics typically uses the simple "rational actor" model, where people perfectly maximize. We will present models that are psychologically more realistic than this standard model. We will enrich the standard model by incorporating psychological phenomena, including bounded rationality, bounded self-interest, and bounded willpower. Applications will include decision theory, game theory, asset pricing, savings, portfolio allocation, stock market predictability, neuroeconomics.

There will be 5 or so problem sets during the course of the semesters. Each student's weakest problem set will not count.

Late problem sets will not be accepted. (Since late problem sets are not accepted, we've built a little flexibility into the system by not counting the weakest problem set.)

The assigned texts cover only part of the material. Therefore, you will have to rely more than usual on your notes from lecture. At the end of each week, we will put some course notes on the course's web page. In addition, I will often assign articles in class; these are required. A preliminary list of readings is below, but the list may change during the semester. All of these readings will either have links from the course website, or will be handed out in class before you would be required to read them.

The midterm and the final exam will be closed books, closed notes.

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