Game Theory and Behavioural Economics

22B1882

Bachelor

English

5.0

only winterterm

1 semester

In this course, students will learn how to apply the perspectives of game theory and of behavioural economics to understand and analyze social interaction in the economy and beyond. They will learn, on the one hand, to analyze the implications of the neoclassical assumptions of human behavior using the rigorous methods of game theory. On the other hand, they will learn to question the neoclassical model in the light of empirical evidence that human beings behave at times irrationally and at other times not selfishly.

In the part on game theory, students will learn to analyze the structure and properties of social interactions in terms of the fundamental distinctions of game theory, in particular those between cooperative and non-cooperative games, repeated and one-off games, single-equilibrium, multi-equilibrium and disequilibrium. They will also get a basic understanding of auctions and of bargaining.

In behavioural economics, students will study the overwhelming empirical evidence of human behavior that deviates from the neoclassical assumptions of rational utility maximization. They will learn to distinguish the two distinct ways of such discrepancies, namely irrational behaviour on the one hand (heuristics, biases, fallacies etc.) and non-selfish behaviour (sense of fairness, ethical commitment, group identity etc.) on the other hand.

The total workload for the module is 150 hours (see also "ECTS credit points and grading").

• Written examination or
• Portfolio exam

The portfolio exam covers 100 points and consists of one written paper (HA) and a one-hour written examination (K1). The written paper and the examination are weighted by 50 points each. 

Written examination: in accordance with the valid study regulations

Written paper of the PFP: approx. 10 pages

The requirements are specified in the relevant class.

Basic knowledge of Economics

Students broaden their knowledge of economic theory and become familiar with models of human behaviour that are more differentiated than the neoclassical model.

Students can employ the insights and methods of game theory and behavioural economics to analyze and explain the results of complex social interactions.

Students understand that the textbook view of human behaviour and interaction provides an oversimplifying lens through which all social interaction is interpreted in a reductionist way as rational utility maximization, and market outcomes in particular as the result of supply and demand. This course enables them to evaluate different perspectives on social interaction and to accept that no single perspective is always appropriate.

They are able to carry out economic analyses and economic policy evaluations using insights of game theory and of behavioural economics. They are in a better position to predict behavioural effects for the economy and financial markets. They are able to devise effective strategies and solutions to economic problems.

Students can creatively use a diverse set of economic perspectives and tools and develop possible solutions.

Students can explain economic phenomena out of different perspectives, drawing on their knowledge of the economic, social and psychological dimensions of any human behaviour and social interaction to reach across disciplinary boundaries.

Students have developed an ability to recognize general patterns and principles of human behaviour and social interaction, enabling them to analyze current economic policy issues in a more integrated way and to make multidimensional assessments.

The economics and business administration modules of the first two semesters address human behaviour in an economic context in different ways. This module supplements the previous knowledge with game theory and behavioural economics aspects.  

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