Behavioral Economics: When Psychology and Economics Collide

Overview

Gain a deeper awareness of how you make decisions, and what steps you can take to make better ones, improving both your financial future and your overall happiness.

Behavioral economics is the study of decision making, and of the related themes of valuation, exchange, and interpersonal interactions. Using methods from psychology, sociology, neurology, and economics, behavioral economics sheds light on one of the most fundamental activities of human life: the decision process.

In 24 insightful lectures, you’ll learn how behavioral economists look at decision making and explore a set of key principles that offer deep insight into how we evaluate information and integrate different factors to make decisions. Using real-life illustrations and case studies, each lecture offers practical tools, so that you can understand the patterns of decision making, the purposes they serve, and how to use your knowledge to make better and more satisfying decisions.

You’ll explore key topics such as decisions regarding probability, time-related decisions, managing risk, high-stakes medical decisions, and group decision making. Professor Huettel illustrates each concept with meaningful examples, analogies, and case studies, relating the material directly to the decisions all of us make as a central part of living. This unique course gives you essential knowledge and insights for one of life’s most important skills.

Course Outline

01: What Is a Good Decision?

Examine rational choice models of decision making and the limitations that challenge our decision-making process.

Duration: 32 min

02: The Rise of Behavioral Economics

Understand how behavioral economics uses methods from both economics and psychology to explain biases in decision making.

Duration: 30 min

03: Reference Dependence—It’s All Relative

Explore the nature of value and how reference dependence leads to biases that affect choices.

Duration: 29 min

04: Reference Dependence—Economic Implications

Learn how reference dependence influences individual and market behavior, and how understanding it can improve decision making.

Duration: 28 min

05: Range Effects—Changing the Scale

Discover how the principle of range effects explains inconsistencies in human behavior and how to minimize its influence.

Duration: 29 min

06: Probability Weighting

Examine how people convert objective probability information into subjective perceptions, leading to bias and error.

Duration: 29 min

07: Risk—The Known Unknowns

Learn about risk aversion and risk-seeking behavior in both economic and personal contexts, and strategies for managing risk.

Duration: 29 min

08: Ambiguity—The Unknown Unknowns

Investigate the conditions that produce ambiguity in decision making and learn a two-step approach for dealing with it.

Duration: 28 min

09: Temporal Discounting—Now or Later?

Study the tendency to view future rewards as less valuable than immediate ones and how to make better time-related decisions.

Duration: 29 min

10: Comparison—Apples and Oranges

Explore how subjective values are created and compared, and how to use this process to your advantage.

Duration: 28 min

11: Bounded Rationality—Knowing Your Limits

Understand how bounded rationality affects complex decisions and the strategies for managing decision-making processes.

Duration: 30 min

12: Heuristics and Biases

Master common heuristics and cognitive biases that can lead to erroneous conclusions in decision making.

Duration: 31 min

13: Randomness and Patterns

Examine the nature of randomness and how our brains look for patterns, often leading to misconceptions.

Duration: 30 min

14: How Much Evidence Do We Need?

Learn how to assess the quality of evidence in decision making and the mistakes we often make regarding it.

Duration: 29 min

15: The Value of Experience

Discover the cognitive benefits of purchasing experiences over material goods and how memory plays a role in satisfaction.

Duration: 30 min

16: Medical Decision Making

Explore how behavioral biases affect medical decisions for both patients and physicians, and how to improve the decision-making process.

Duration: 31 min

17: Social Decisions—Competition and Coordination

Investigate how decision-making changes when coordinating with others and the elements of game theory involved.

Duration: 31 min

18: Group Decision Making—The Vox Populi

Learn about the “wisdom of crowds” and the factors that contribute to good group decisions.

Duration: 30 min

19: Giving and Helping—Why Altruism?

Examine the nature of altruism and the cognitive biases that affect generosity and charitable giving.

Duration: 30 min

20: Cooperation by Individuals and in Societies

Explore why cooperation arises and the factors that promote it in both individual and societal contexts.

Duration: 31 min

21: When Incentives Backfire

Understand how incentives can sometimes discourage the very behavior they are intended to promote.

Duration: 30 min

22: Precommitment—Setting Rationality Aside

Study precommitment strategies and how they can improve decision-making for future benefits.

Duration: 30 min

23: Framing—Moving to a Different Perspective

Learn about the framing effect and how it influences decision-making in various contexts.

Duration: 29 min

24: Interventions, Nudges, and Decisions

Conclude with how leaders can shape decisions and the ethical considerations of influencing others’ choices.

Duration: 31 min