Overview

Most of what we learn in economics and management assumes that human beings behave as rational agents. This fundamental assumption underlies the equations of economists as well as the analysis of players and observers in financial markets. Over the past few decades, however, research in psychology and economics has shown that our actual behaviors are inconsistent with these models. Human beings, it appears, deviate from economic rationality in systematic, consistent and predictable ways. The study of such “biases” has become a cornerstone of what is now known as “Behavioral Economics” (BE), with many applications, e.g., in marketing, finance and public policy. 

Learning outcomes

In this course, you will:

  • Discover, both intellectually and experientially, the limitations of your own “rationality”. 
  • Learn to recognize a number of systematic errors in strategy decisions, which have their roots in behavioral biases.
  • Become familiar with the theoretical foundations of behavioral economics (heuristics and biases, prospect theory).
  • Learn to spot the managerial and organizational situations that are conducive to such errors.
  • Analyze and practice techniques that can limit the effect of biases in management decision making and reduce the risk of strategic errors, both in individual and group settings.