Behavioral Economics

The purpose of this course is to inform future managers, analysts and consultants of the deeper 
psychological processes which underlie decision making. The course will enable the students to 
incorporate the insights into marketing, human resource practices, finance and business 

How a woman (or a man) fares in life depends to a large extent on a series of decisions that she 
takes. However, the process of how we arrive at decisions is often very complex. To keep things 
simple, economists assumed away much of the complexity and developed a rather simplistic 
framework for analyzing human behavior. The framework came to be known as the Rational 
Actor Model, where human beings were assumed to have many super human power. Let’s call 
them homo economicus or simply, Econs. Econs are willful, selfish and have perfect foresight while also possessing extraordinary abilities to make complex calculation at very short period of time. 

Behavioral Economics was born as an antithesis to the Rational Actor Model. In this alternative 
paradigm, human beings were assumed to be less selfish and smart, prone to mistakes and 
procrastinations and often times myopic. Let’s call them homo behavioralis or Humans. Do Humans sound more like you and me or for that matter, your neighbor next door?

Consider the following: ask the person on your left the answer to the following: 1 x 2 x 3 x 4 x 5 x 
6 x 6 x 7 x 8 x 9 = ? To the one on your right: 9 x 8 x 7 x 6 x 5 x4 x 3 x 2 x 1=? Chances are that the one on your right will quote a higher number. The reason is they are Humans. If they were all 
Econs, the answer they would give would all be the same and it would indeed be the correct 

Each topic covered in this course will have two facets. First, students will get a broad overview 
of important results from behavioral economics and psychological aspects of economic decision 
making. Second, the students will see applications corresponding to these results. The course will 
also introduce the students the idea of experimentation - the methodological tool in which one 
thing is changed at a time which in turn makes causal inference possible. Finally, the course will 
draw heavily from the Indian cultural context, thereby giving the students a flavor of the cultural 
specificity and norm of an emerging economy such as India. Overall, the participants will have a 
better understanding of people and how they make decisions, which in turn will allow them to 
take effective managerial decisions. 

Faculty: Ritwik Banerjee

Course Date & Time

For 2023

8th Sep (Friday): 2PM-330PM (IST) 9th Sep (Saturday): 2PM-330PM (IST)   Every Friday and Saturday same time.   No lectures on 20th and 21st October.   Last Lecture: 18th November (Saturday). Project presentation: 8th December 2-5PM and 9th December 2-4PM    Presentation hours: 5   Total contact hours: 35

For 2024

First Lecture 10th Jan (Wed) 230 PM to 400 PM (IST) Second Lecture 11th Jan (Thu) 230 PM to 400 PM (IST) Every Wed and Thu the same time. No lectures on 14th and 15th Feb. Project presentation 27th March 2-5 PM and 28th March 2-4 PM Presentation hours 5 Total contact hours 35