Behavioural Economics

Day 1Foundations: How We Actually Decide+

Shatter the rational actor model. Start with the simplest, most visceral demonstrations of bounded rationality.

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9:00–4:00 · 2 experiments · 1 reading block · 1 case study · synthesis discussion · field notes

Morning Experiment

9:30 AM

Anchoring Effect

Estimate an unknown quantity after being exposed to a random high or low anchor. The gap between groups is usually dramatic and gets the room laughing.

Platform: MobLab (Anchoring) or Google Form

Reading Block (11:00 AM, ~50 min)

Ariely, Predictably Irrational, Ch. 1: "The Truth About Relativity." ~12 pp.Open the reading to unlock (~25 min)

Afternoon Experiment

1:30 PM

Prospect Theory Gambles

Paired gambles revealing loss aversion, reference dependence, and probability weighting. The theoretical backbone of the entire course.

Platform: MobLab (Prospect Theory) or VECONLAB (Lottery Choice)

Kahneman, Thinking, Fast and Slow, Ch. 26: "Prospect Theory." ~12 pp.Open the reading to unlock (~25 min)

Case Study

2:30 PM

The Store That Stopped Playing Games: JCPenney's "Fair and Square" Pricing

In 2012, JCPenney eliminated all sales, coupons, and markdowns in favour of honest everyday low pricing. Prices were genuinely lower. Customers fled. Same-store sales dropped 25%, producing a $985 million loss. Why did objectively better deals feel like worse ones? What does the crossed-out "original price" anchor do that a fair price cannot?

Field Notes Prompt

Think of a decision you made recently that felt rational at the time. In light of today's experiments, what heuristics or biases might have been at work?

Submit your Field Notes through Visible AI.

Day 2Ownership, Endowment, and the Status Quo+

Move from perception to valuation. How biases distort what things are worth to us, and how defaults quietly shape choice architecture. The bridge from individual psychology to institutional design.

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Morning Experiment

9:30 AM

Endowment Effect (Mugs)

Half the class receives a coffee mug; the other half does not. The gap between WTA and WTP is typically 2:1 or higher. The most tactile experiment in the course.

Platform: Live with physical mugs + MobLab or spreadsheet

Reading Block (11:00 AM, ~50 min)

Kahneman, Thinking, Fast and Slow, Ch. 27: "The Endowment Effect." ~10 pp.Open the reading to unlock (~20 min)

Afternoon Experiment

1:30 PM

Default Effect

Choices where defaults vary: organ donation, retirement savings, privacy settings. Reveals how powerfully the path of least resistance shapes behaviour.

Platform: MobLab (Survey) with custom scenarios

Johnson & Goldstein (2003), "Do Defaults Save Lives?" ~2 pp. + Thaler & Sunstein, Nudge, Ch. 1 excerpt. ~8 pp.Open the reading to unlock (~20 min)

Case Study

2:30 PM

The Default That Changed a Nation's Retirement

In 2012, the UK switched workplace pensions from opt-in to opt-out. Nothing else changed. Participation surged from 42% to 86%. But among the least financially secure 3% of employees, participation is still above 90% — and for some of them, reducing take-home pay to save may not be in their interest. Is auto-enrolment a "nudge" or a "shove"?

Field Notes Prompt

Identify a default in your life that you've never actively chosen but that significantly shapes your behaviour. What would it take for you to change it, and why haven't you?

Submit your Field Notes through Visible AI.

Day 3Social Preferences and Fairness+

The pivot from individual cognition to social behaviour. When the responder has no power, do people still share?

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Morning Experiment

9:30 AM

Ultimatum Game

Pairs split money. The proposer offers; the responder accepts or rejects. Offers below 20–30% are routinely rejected. The most famous finding in behavioural economics.

Platform: MobLab (Ultimatum Game) or VECONLAB

Reading Block (11:00 AM, ~50 min)

Adam Smith, The Theory of Moral Sentiments, Part I.I.1: "Of Sympathy." ~6 pp.Open the reading to unlock (~12 min)

Afternoon Experiment

1:30 PM

Dictator Game Variations

Three variations: standard, anonymous, earned endowments. Isolates genuine other-regarding preferences from strategic behaviour. The richest discussion in the course.

Platform: MobLab (Dictator Game) or VECONLAB

Henrich et al. (2001), "In Search of Homo Economicus." Excerpt, ~8 pp.Open the reading to unlock (~16 min)

Case Study

2:30 PM

The Letter That Collected £1.9 Million

The UK's Behavioural Insights Team added one sentence to tax reminder letters: "9 out of 10 people in your area have already paid their tax." Timely payment increased by 15%, generating £1.9 million in 23 days. The geographic norm outperformed enforcement messages. People were more motivated by what their neighbours did than by the threat of penalties.

Field Notes Prompt

When is it rational to reject a perfectly good offer? After today's experiments, how would you revise the standard economic assumption that people maximise material self-interest?

Submit your Field Notes through Visible AI.

Day 4Time, Temptation, and Cooperation+

Connect personal self-control failures to collective coordination failures.

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Morning Experiment

9:30 AM

Hyperbolic Discounting

Smaller-sooner vs. larger-later rewards. Everyone discovers they're a hyperbolic discounter.

Platform: MobLab (Time Preferences) or VECONLAB

Reading Block (11:00 AM, ~50 min)

Ariely, Predictably Irrational, Ch. 6: "Procrastination and Self-Control." ~10 pp.Open the reading to unlock (~20 min)

Afternoon Experiment

1:30 PM

Public Goods Game

Groups contribute to a shared good over 5–10 rounds, then add costly punishment. Contributions decay without punishment and stabilise with it.

Platform: MobLab (Public Goods) or VECONLAB

Thaler & Sunstein, Nudge, Ch. 3: "Following the Herd." ~8 pp.Open the reading to unlock (~16 min)

Case Study

2:30 PM

The App That Nudges Its Own Workers: Uber

Uber deployed earnings goal nudges, auto-queued rides, and sunk cost bonuses to keep drivers on the road longer. The same principles as the UK pension nudge — defaults, loss aversion, status quo bias — but deployed to extract labour, not to help people save. Francesca Gino's test: does the nudge benefit both parties, or create gains for one at the other's expense?

Field Notes Prompt

Describe a situation where your future self would disagree with a choice your present self is making. What does this tension reveal about how we should think about "rational" planning?

Submit your Field Notes through Visible AI.

Day 5Markets, Bubbles, and Policy+

The capstone. Everything converges: individual biases, social preferences, and strategic thinking collide in market-level phenomena. The course ends where it has to, with the question of what "rationality" even means when it depends on what everyone else is thinking.

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Morning Experiment (Extended)

9:00 AM

Asset Market Bubble (Vernon Smith)

Trade a fictional asset over 15 periods. Despite knowing its declining value, markets reliably produce bubbles and crashes. The crown jewel of the course.

Platform: VECONLAB (Asset Market)

Reading Block (11:00 AM, ~50 min)

Shiller, Irrational Exuberance, Ch. 1 excerpt. ~10 pp.Open the reading to unlock (~20 min)

Afternoon Experiment

1:30 PM

Beauty Contest Game (Keynes)

Choose a number 0–100; the winner is closest to 2/3 of the group average. Numbers collapse toward zero across rounds but never reach it. Rationality becomes recursive.

Platform: MobLab (Beauty Contest) or spreadsheet

Thaler, Misbehaving, Ch. 11: "Beauty Contests and Efficient Markets." ~8 pp.Open the reading to unlock (~16 min)

Case Study

2:30 PM

The $7.20 Question: Porter Airlines and the Irrationality of Flight

The global airline industry earns $7.20 per passenger. Porter spends $3–4 per passenger on free wine and snacks — and is building a $450 million terminal. The capstone case: anchoring (free wine), loss aversion (no middle seat), social norms (the Porter effect forced Air Canada to respond), and choice architecture (default bundling). Is Porter an airline or a behavioural economics case study that happens to fly planes?

Field Notes Prompt

If you could redesign one institution, market, or policy using what you've learned this week, what would it be and why? Where would you draw the line between nudging and manipulation?

Submit your Field Notes through Visible AI.

Assessment & Course Library

25%

Field Notes

Daily 300–500 word synthesis entries responding to the day's reflection prompt. Five entries total, written in-room (3:30–4:00 PM). Submit through Visible AI.

Due: End of each day (in-room)

20%

Participation

Active participation in experiment debriefs, reading discussions, and synthesis conversations. Quality and thoughtfulness matter more than volume.

Due: Ongoing

20%

Lab Reports

Choose any 2 experiments. For each, write a 500–750 word lab report: experimental design, your results, comparison to theoretical predictions, and one real-world application. Submit through Visible AI.

Due: May 8, 2026

25%

Reflective Essay

2,000–2,500 words. Choose one prompt: (a) Select a real-world policy or institutional design and propose a behavioural intervention drawing on at least three experiments. (b) Critically evaluate the "nudge" approach: under what conditions is it effective, and where does it fail or raise ethical concerns? Submit through Visible AI.

Due: May 15, 2026

10%

Peer Discussion

Structured peer discussion during debrief sessions. Assessed on engagement with classmates' ideas, ability to connect experimental results to broader concepts, and constructive analytical thinking.

Due: Ongoing

Course Library

Kahneman, Daniel. Thinking, Fast and Slow. Farrar, Straus and Giroux, 2011.If you read one book. The foundational text of the field.

Thaler & Sunstein. Nudge. Penguin, 2009 (updated 2021).The bridge between behavioural science and real-world institutional design.

Thaler, Richard H. Misbehaving. W.W. Norton, 2015.Part memoir, part intellectual history of the field.

Ariely, Dan. Predictably Irrational. Harper Perennial, 2008.Accessible, experiment-driven. Note: some of Ariely's later work has faced scrutiny; assigned chapters draw on well-established findings.

Shiller, Robert J. Irrational Exuberance. Princeton UP, 3rd ed., 2015.Written before the 2008 crash, updated after it.

Smith, Adam. The Theory of Moral Sentiments. 1759. Freely available online.The other Adam Smith book. Makes him a proto-behavioural economist.

Lewis, Michael. The Undoing Project. W.W. Norton, 2016.The story of Kahneman and Tversky's collaboration.

Henrich et al. "In Search of Homo Economicus." AER 91.2 (2001).Landmark cross-cultural study. Short, worth reading in full.

Behavioural Economics

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Assessment & Course Library