2309MS07

Experimental Research and Behavioral Decision Making

Various robust deviations from rational decision making have been reported such as loss aversion, probability weighting, status quo bias, overconfidence etc. Understanding those deviations leads to a more realistic modelling of the behavior of different economic actors and to an increased prediction success. In this course, participants will understand those and other important deviations from rationality as well as their theoretical explanations/modelling, e.g., prospect theory and mental accounting. Most theories have been developed implementing psychological and economic experiments. Whereas psychological experiments are mostly asking the respondents for hypothetical choices, real decisions with actual monetary payoffs are implemented in economic experiments. Half of the course will be concerned with a profound introduction to several deviations from rationality that have been reported with real decision makers, with the theoretical treatment of those deviations, as well as with a definition of experimental research and with the basic features of experiments. The other half of the course will analyze different selected papers (potentially including some planned projects by participants) and always addresses the match between research question and empirical method (mostly: type of experiment) to be used.