Behavioral Economics and Finance

Departures from the expected utility framework and traditional discounting have been shown to better match observed behavior in many situations. Whether it is loss and ambiguity aversion, present-bias and temptation, or general biases in perceptions of risk and choice situations, these deviations from the standard framework have profound implications for how firms should design products and contracts and how governments regulate and design markets and programs. The course aims to apply concepts to different settings including saving and debt management, the purchase of insurance for various late-life risks faced by agents (e.g. health expenses, disability, longevity, income) reviewing the empirical and modelling literature in each of these settings.