Syllabus/achievement requirements

@ = material available online

* = for sale in Akademika as part of a compendium

Literature providing an overview over behavioral economics

Support material

@ Camerer, C. and Loewenstein, G. "Behavioral Economics: Past, Present, Future", 2004. In Camerer, C., Loewenstein, G. and Rabin, M. (Eds.). Advances in Behavioral Economics (pp. 3-51). New York and Princeton: Russell Sage Foundation Press and Princeton University Press (pdf)

@ Laibson, D. and Zeckhauser, R.. Amos Tversky and the Ascent of Behavioral Economics, 1998. Journal of Risk and Uncertainty, 16(1): 11-46. DOI: 10.1023/A:1007717224343.

@ Rabin, M. Psychology and Economics, 1998. Journal of Economic Literature, 36(1): 11-46. ISSN: 0022-0515

@ Rabin, M. A Perspective on Psychology and Economics, 2002. European Economic Review, 46((4): 657-685. DOI: 10.1016/S0014-2921(01)00207-0.

Literature on Topic 1: Markets and behavioral decision theory


@ Kahneman, D., J. Knetsch, and R. Thaler: "Anomalies: The Endowment Effect, Loss Aversion, and Status Quo Bias" in Journal of Economic Perspectives, 5, winter, pp. 193-206, 1992.


@ Plott, C. R. Externalities and Corrective Policies in Experimental Markets, 1983. The Economic Journal, 93(369): 106-127. DOI: 10.2307/2232168.

Support material

@ Plott, C. R. "Properties of disequilibrium adjustment in double auction markets", 2008. In Plott and Smith (eds,) Handbook of Experimental Economic Results. DOI: 10.1016/S1574-0722(07)00001-7.

@ L. Smith. V. L. Theory, Experiment and Economics, 1989. Journal of Economic Perspectives, 3(1): 151-169. DOI: 10.1257/jep.3.1.151.

@ Fehr, E. and Tyran, J.-R. Individual Irrationality and Aggregate Outcomes, 2005. Journal of Economic Perspectives, 19(4): 43-66. DOI: 10.1257/089533005775196651.

@ Plott, C. R. and Sunder, S. Efficiency of Experimental Security Markets with Insider Information: An Application of Rational-Expectations Models, 1982. Journal of Political Economy, 90(4): 663-698. DOI: 10.1086/261084.

Expected utility and conjunction fallacy

If you are unfamiliar with expected utility, it may be worth wile reconsider the introductions from standard textbooks, for instance Varian, H.R. Microeconomic Analysis, 1992. New York: Norton. ISBN: 9780393960266, third edition, chapter 11.

@ Gigerenzer, G., Hertwig, R., Hoffrage, U. and Sedlmeier, P. Cognitive Illusions Reconsidered, 2008. Handbook of Expiremental Economics Results 1, chapter 109:1018-1034. DOI: 10.1016/S1574-0722(07)00109-6.

@ Tversky A. and Khaneman, D. Extensional versus Intuitive Reasoning: The Conjunction Fallacy in Probability Judgement, 1984. Psychological Review, 90(1): 293-315. DOI: 10.1037/0033-295X.90.4.293.

Prospect theory and endowment

@ Kahneman, D. and Tversky, A. Prospect Theory: An Analysis of Decision under Risk, 1979. Econometrica, 47(2): 263-291. DOI: 10.2307/1914185.

@ Kahneman, D., Knetsch, J. and Thaler, R. Experimental Tests of the Endowment Effect and the Coase Theorem, 1990. Journal of Political Economy, 98(6): 1325-1348. E-ISSN: 1537534X.

@ Marzilli Ericson, K. M. and Fuster. A. The Endowment Effect, 2014. Annual Review of Economics, 61(1): 555-79. DOI: 10.1146/annurev-economics-080213-041320.

@ Plott, C. R and Zeiler, K. The Willingness to Pay-Willingness to Accept Gap, the "Endowment Effect", Subject Misconceptions and Experimental Procedures for Eliciting Values, 2005. American Economic Review, 95 (3): 530-545. ISSN: 0002-8282.

@ Rabin, M. and Thaler, R. Anomalies: Risk aversion, 2001. Journal of Economic Perspectives, 15(1): 219-232. ISSN: 08953309.

Support material

@ Camerer, C. Prospect Theory in the Wild: Evidence from the Field, 2000. Choices, Values and Frames, 2000.

@ Köszegi, B. and  Rabin, M. A Model of Reference-dependent Preferences, 2006. Quarterly Journal of Economics, 121(4): CXXI. ISSN: 0033-5533.

@ List, J. Neoclassical Theory Versus Prospect Theory: Evidence from Marketplace, 2004. Econometrica, 72(2): 615-625. DOI: 10.1111/j.1468-0262.2004.00502.x.

@ Rabin, M. Risk Aversion and Expected-Utility Theory: A Calibration Theorem. 2000. Econometrica, 68(5): 1281-1292. DOI: 10.1111/1468-0262.00158.

@ Starmer, C. Developments in Nonexpected-Utility Theory: The Hunt for a Descriptive Theory of Choice Under Risk, 2000. Journal of Economic Literature, 38(2): 332-382. DOI: 10.1257/jel.38.2.332.

Mental accounting and applications

@ Barberis, N. C. Thirty Years of Prospect Theory in Econometrics: A Review and Assessment, 2013. Journal of Economic Perspectives, 27(1): 173-196. DOI: 10.1257/jep.27.1.173.

@ Thaler, R. H. Mental Accounting Matters, 1999. Journal of Behavioral Decision Making, 12(3): 183-206. DOI: 10.1002/(SICI)1099-0771(199909)12:3<183::AID-BDM318>3.0.CO2-F

@ Thaler, R.H. and Sunstein, C.R. Libertarian Paternalism, 2001. The American Economic Review, 93(2): 175-179. 183-206. DOI: 10.1257/000282803321947001.

Support material

@ Barberis, N.,  Huang, M. and Santos, T. Prospect Theory and Asset Prices, 2001. Quarterly Journal of Economics, 116(1): 1-53. DOI: 10.1162/003355301556310.

@ Benartzi, S. and Thaler:, R. Myopic Loss Aversion and the Equity Premium Puzzle, 1995. Quarterly Journal of Economics, 110(1): 73-92. E-ISSN: 15314650.

@ Camerer, C., Babcock, L., Loewenstein, G. and Thaler, R. Labor Supply of New York City Cabdrivers: One Day at a Time, 1997.Quarterly Journal of Economics, 112(2): 407-443. E-ISSN: 15314650.

@ Prelec, D. and Loewenstein, G. The Red and the Black: Mental Accounting of Savings and Debt, 1998. Marketing Science, 17(1): 4-28. DOI: 10.1287/mksc.17.1.4.

Literature on Topic 2: Time inconsistency and self-control

Introduction to self-control problems

@ Frederick, S., Loewenstein, G. and O'Donoghue, T. Time Discounting and Time Preference: A Critical Review, 2002. Journal of Economic Literature, 40(2): 351-401. DOI: 10.1257/002205102320161311.

@ Strotz, R.H. Myopia and Inconsistency in Dynamic Utility Maximization, 1956. Review of Economic Studies, 23(3): 165-180. E-ISSN: 1467937X.

Support material

@ Loewenstein, G. and Prelec, D. Anomalies in Intertemporal Choice: Evidence and an Interpretation, 1992. Quarterly Journal of Economics, 107(2): 573-597. E-ISSN: 15314650.

@ Rubinstein, A. Discussion of 'Behavioral Economics', in Advances in Economics and Econometrics - Theory and Applications, 2005. Ninth World Congress of the Econometric Society, Blundell, R., Newey, W.K., Persson, T. (eds.), Volume II, pp. 246-254 (pdf)

@ Goldman, S.M. Consistent Plans, 1980. Review of Economic Studies, 47(3): 533-537. E-ISSN: 1467937X.

Modeling self-control problems I: Multi-self vs. temptation

@ Gul, F. and Pesendorfer, W. Self-Control and Theory of Consumption, 2004. Econometrica, 72(1): 119-158. E-ISSN: 14680262.

@ O'Donoghue, T. and Rabin, M. Doing it Now or Later, 1999. American Economic Review, 89(1): 103-124. DOI: 10.1257/aer.89.1.103.

Support material

@ O'Donoghue, T. and Rabin, M. Choice and Procrastination, 2001. Quarterly Journal of Economics, 116(1): 121-160. E-ISSN: 15314650.

@ Heidhues, P. and Koszegi, B. Futile attempts at self-control, 2009. Journal of European Economic Association, 7(2-3), 423-434. DOI: 10.1162/JEEA.2009.7.2-3.423.

@ Ariely, D. and Wertenbroch, K. Procrastination, Deadlines, and Performance: Self-Control by Precommitment, 2002. Psychological Science, 13(3), 219-224. DOI: 10.1111/1467-9280.00441.

@ Gul, F. and Pesendorfer, W. Temptation and Self-Control, 2001. Econometrica, 69(6): 1403-1435. E-ISSN: 14680262.

Application to the theory of consumption

@ Laibson, D. Golden Eggs and Hyperbolic Discounting, 1997. Quarterly Journal of Eonomics, 112(2): 443-477. DOI: 10.1162/003355397555253.

@ Laibson, D. Life-Cycle Consumption and Hyperbolic Discount Functions,1998. European Economic Review, 42(3): 861-871. DOI: 10.1016/S0014-2921(97)00132-3.

@ Angeletos, G.-M., Laibson, D., Repetto, A., Tobacman, J. and Weinberg, S. The Hyperbolic Consumption Model: Calibration, Simulation, and Empirical Evaluation, 2001. Journal of Economic Perspectives, 15(3), 47-68. DOI: 10.1257/jep.15.3.47.

Modeling self-control problems II: Dual self

@ Thaler, R. and H. Shefrin An Economic Theory of Self-Control, 1981. Journal of Political Economy, 89(2): 392-406. DOI: 10.1086/260971.

@ Fudenberg, D. and Levine, D.M. A Dual Self Model of Impulse Control, 2006. American Economic Review, 96(5): 1449-1476. DOI: 10.1257/aer.96.5.1449.

Literature on Topic 3: Social preferences and fairness


@ Fehr, E. and Fischbacher, U. Why Social Preferences Matter - the Impact of Non-Selfish Motives on Competition, Cooperation and Incentives, 2002. Economic Journal, 112(478): C1-C33. DOI: 10.1111/1468-0297.00027.

@ Sobel, J. Interdependent Preferences and Reciprocity, 2005. Journal of Economic Literature, 43(2): 392-436 (chapter 5 can be skipped). DOI: 10.1257/0022051054661530.

Experimental economics

* Camerer, C. Dictator, Ultimatum, and Trust Games, 2003. Chapter 2 in: Behavioral Game Theory. Experiments in Strategic Interaction, New York: Russel Sage Foundation. ISBN: 1-4008-4088-0. Page 43-113.

Inequality aversion

@ Fehr, E. and Schmidt, K. M. A Theory of Fairness, Competition, and Cooperation, 1999. Quarterly Journal of Economics, 114(3): 817-868. E-ISSN: 15314650.

 * Camerer, C. Dictator, Ultimatum, and Trust Games, 2003. Selected pages of Chapter 2 in: Behavioral Game Theory. Experiments in Strategic Interaction, New York: Russel Sage Foundation. ISBN: 1-4008-4088-0. Page 101-104.

@ Sobel, J. Interdependent Preferences and Reciprocity, 2005. Journal of Economic Literature, 43(2): 398-401. DOI: 10.1257/0022051054661530.


* Camerer, C. Dictator, Ultimatum, and Trust Games, 2003. Selected pages of Chapter 2 in: Behavioral Game Theory. Experiments in Strategic Interaction, New York: Russel Sage Foundation. ISBN: 1-4008-4088-0. Page 105-117 (chapter 2.8.4 Extensive-Form Fairness Equilibrium can be skipped).

@ Sobel, J. Interdependent Preferences and Reciprocity, 2005. Journal of Economic Literature, 43(2): section 3.4. 2005. DOI: 10.1257/0022051054661530.

Support material

@ Fehr, E., and Gächter, S. Altruistic Punishment in Humans, 2002. Nature, 415(6868): 137-140. DOI: 10.1038/415137a.

@ Rabin, M, Incorporating Fairness into Game Theory and Economics, 1993. American Economic Review 83(5-6): 1281-1302. ISSN: 0002-8282.


@ Nyborg, K and Rege, M. Does Public Policy Crowd Out Private Contributions to Public Goods?, 2003. Public Choice 115(3): 397-418. DOI: 10.1023/A:1024245522958.

@ Sobel, J. Interdependent Preferences and Reciprocity, 2005. Journal of Economic Literature, 43(2): section 3.3. 2005. DOI: 10.1257/0022051054661530.

@ Brekke, K. A., Kverndokk, S. and Nyborg, K. An Economic Model of Moral Motivation, 2003. Journal of Public Economics, 87(9): 1967-1983. DOI: 10.1016/S0047-2727(01)00222-5.

Support material

@ Andreoni, J. Giving with Impure Altruism: Applications to Charity and Ricardian Equivalence, 1989. Journal of Political Economy 97(6): 1447-1458. ISSN: 0022-3808.

Social norms and social approval

@ Nyborg, K. Social Norms and the Environment, 2018. Annual Review of Resource Economics 10, DOI: 10.1146/annurev-resource-100517-023232.

@ Young, H. P. Social Norms and Economic Welfare, 1998. European Economic Review 42(3): 821-830 (only Sections 1-4 are compulsory reading). DOI: 10.1016/S0014-2921(97)00138-4.

@ Young, H. P. The Evolution of Social Norms, 2015. Annual Review of Economics, 71(1): 359-387 (sections 4-7 and 9 can be skipped). DOI: 10.1146/annurev-economics-080614-115322.

@ Nyborg, K., Anderies J. M., et al. Social Norms as Solutions, 2016. Science, 3546308: 42-43. DOI: 10.1126/science.aaf8317.

Support material

@ Akerlof, G. A. A Theory of Custom, of Which Unemployment May be One Consequence, 1980. Quarterly Journal of Economics 94(4): 749-775. E-ISSN: 15314650.

@ Lindbeck, A. Incentives and Social Norms in Household Behavior, 1997. American Economic Review 87(2): 370-377. ISSN: 0002-8282.


Published May 14, 2018 4:20 PM - Last modified Oct. 12, 2018 1:58 PM