Course : Behavior Influence: Nudge Theory and Decision Making Strategy

Course Syllabus

Behavioral Economics bridges economics and decision making, providing insights into why people sometimes make irrational choices.

Traditional economic models rely on the assumption that individuals act rationally to maximize utility. However, through the work of pioneers like Daniel Kahneman and Richard Thaler, we know that real-world decisions are often influenced by biases, emotions, and social factors.

During this course, we'll dive into how these factors impact everything from people choices to government policies, reshaping our understanding of decision making process.

The foundation of Behavioral Economics lies in understanding that people do not always act rationally.

Cognitive biases influence decisions. For example, rather than making purely logical choices, individuals may rely on mental shortcuts (heuristics) or be swayed by how information is presented. This merging allows us to better forecast and influence real-world behavior.

Traditional models of 'Homo Economicus' assume that people make decisions by perfectly weighing the costs and benefits to maximize their outcomes.

In contrast, Behavioral Economics suggests that real people – 'Homo Sapiens' – are influenced by limitations, cognitive biases, and emotions, which often lead to less-than-rational decisions. This is best illustrated by Herbert Simon’s concept of Bounded Rationality, where individuals make decisions that are 'good enough' given the constraints they face rather than optimal.