Decision Theory: How to Model Rational Choice
This course is expected to run but has not yet been scheduled.
What is rational choice? How do economists model the decision making process? The primary objective of this course is to understand the standard way of modeling choice, which serves as the foundation of both micro- and macroeconomics.
The course will be divided into two parts. In the first part, the traditional way of modeling individual and group choice will be developed. Students will be introduced to the fundamental concepts of preference and utility, and a substantial amount of time will be devoted to the study of choice models under uncertainty. A brief analysis of social choice theory will conclude the first part of the course. The second part of the course links the theoretical first part to actual evidence and data collected from recent laboratory experiments. We will use recent evidence from a variety of disciplines and discuss how this evidence aligns with the standard assumptions of decision theory. In this part, students will be introduced to the emerging fields of economics, such as neuroeconomics and behavioral economics.
By the end of this course, students will have a comprehensive understanding of how decisions are modeled in economic theory. They will know the basic assumptions underpinning economic theory and learn how these assumptions align with actual evidence. By doing so, the students will understand how an economist thinks about economic agents and their decisions and why this approach has been and is still being criticized by various other disciplines.
This course has no prerequisites.