The course gives Insights into advanced theories in behavioral economics with special focus on how social and economic preferences influence people's behavior and economic decisions and how they relate to risk and uncertainty. Experimental methods are central for the identification of causal relationships as well as for measuring unobservable variables such as social and economic preferences.

Topics in behavioral economics include: rational vs. irrational behavior, uncertainty and expected utility, prospect theory, time preferences and discounting, risk preferences and responses to risk, social preferences, trust, endowment effects.

Topics in experimental design include: basic design issues, randomization and causal identification, implementation of laboratory experiments, field experiments, internal and external validity.

The students learn to distinguish rational from irrational behavior based on expected utility theory and discounted utility maximization for intertemporal choice.

Students learn about systematic deviations from expected utility theory and how rank dependent utility and cumulative prospect theory may predict such behavior.

Students learn about the advantages and limitations of laboratory and field experiments (internal and external validity).

Students learn a set of standard experimental games and methods and what has been learnt from these: dictator game, Ultimatum game, trust game, public goods game, methods to elicit risk preferences, methods to elicit time preferences.

Students are given one exercise where they will design their own experiment which they will present in class.

Five compulsory exercises must have been submitted and approved (quality check) before a candidate can take the exam. Exercises are valid until the next time the course is offered and for re-examination.

Exercise 1: Social preferences. The students are subjects in the exercise to get a feel for how that is. They also learn about the findings from such experiments.

Exercise 2. Risk preferences. The students are given an experimental protocol (Multiple Choice List Approach) for interviewing respondents and are given the task to interview 5 persons each with this protocol and then asked to design a way to standardize such interviews.

Exercise 3. Time preferences. The students are given a data set collected by other students in the course in the past based on an experimental protocol to elicit time preferences. They shall organize the data and do econometric analysis of the experimental data to test three central hypotheses about time preferences anomalies. 

Exercise 4. The students select a course-relevant paper that they present in class.

Exercise 5. Each student designs her/his own experiment and presents in class. They vote on the best experiment/presentation.