Seminar Behavioral Public Finance

Please note: 1) The unit consists of two parts: a series of lectures (I) and a series of seminar sessions (II). 2) We expect that you prepare for the lecture sessions by working through the suggested literature. 3) To receive 6 credits, you need to a. prepare (and pass) a classroom assignment on the topics of the lectures. b. write a term paper and give a presentation on the same topic. 4) The grade depends on the quality of the term paper and the presentation. 5) The term paper topics are assigned on the basis -first come first serve-. Please come to our office (room 3210 and 3209B, Wiso A) to sign up for a specific topic. Each topic can be assigned twice. Please note that your registration for the course becomes binding once you sign up for a topic. 6) A guideline on how to write a term paper is available with us. The term paper should have 12 pages of text. 7) The seminar sessions will start in December. The term paper can be prepared and handed in in the upcoming semester break. Organizational details are discussed in the first session. 8) If you have any questions, please do not hesitate to contact me. 9) It is possible to achieve 3 instead of 6 Credits. In this case you have to pass an exam on the topics of the lectures (part I). Alternatively, you can write a term paper and give a presentation without preparing the assignment before. Part I: Behavioral Economics - an introduction A. Behavioral Economics - Defining a new field in economics 1. Rationality in economics and psychology 2. Conventional economics versus behavioral economics B. Anomaly-Hunting 1. Anomalies in games against nature 2. Anomalies in games 3. Violations of the implicit assumptions underlying rationality in economics C. Broadening the scope of preferences 1. Other-regarding preferences 2. Expressive motives 3. Procedural preferences D. Methods in behavioral economics 1. Experimental Economics 2. Neuroeconomics E. Models with non-standard utility functions - a selection 1. Identity Economics 2. Fairness-based equilibrium F. Models of boundedly rational behavior - a selection 1. Prospect theory 2. Decision making in a complex world - schemata and mental models 3. Fast and frugal heuristics (4. Rules of thumb) G. Learning 1. Knowledge representation and types of learning 2. Selected models of learning Literature: Akerlof, G. A. and Kranton, R. E. (2000). Economics and Identity. Quarterly Journal of Economics Vol. CXV(3), p.715-753. Akerlof, G. A. and Kranton, R. E. (2001). A model of oppositional culture. Mimeo. Becker, G. S. (1986). The economic approach to human behavior. in: Elster, J. (Hrsg.). Rational Choice. Oxford, Basil Blackwell: 108-122. Brenner, T. (1999). Modelling Learning in Economics. Cheltenham, Edward Elgar. Camerer, C., Loewenstein, G. and Prelec, D. (2005). Neuroeconomics: How Neuroscience Can Inform Economics, Journal of Economic Literature, Vol. XLIII, 9-64. De Kleer, J. and Brown, J. S. (1983). Assumptions and Ambiguities in Mechanistic Mental Models. in: Gentner and Stevens (Hrsg.): 155-191. Fehr, E. and Schmidt, K. (1999). A theory of fairness, competition and cooperation, Quarterly Journal of Economics Vol. 114(3) 817-868 Friedman, D. and Sunder, S. (1994). Experimental methods, A primer for economists. Cambridge: Cambridge University Press. Gigerenzer, G., Todd, P. M. and the ABC Research group (1999, eds.). Simple heuristics that make us smart. Oxford, Oxford University Press. Kahneman, D. and Tversky, A. (1979). Prospect Theory: An analysis of decision under uncertainty, in: Econometrica 47, S.263-291. Kahneman, D. and Tversky, A. (1992). Advances in Prospect Theory: Cumulative Representation of Uncertainty, in: Journal of Risk and Uncertainty 3, S.297-323. Konow, J., 2003. Which is the fairest one of all? A positive analysis of justice theories. Journal of Economic Literature XLI, 1188-1239. Loewenstein, G. and Adler, D. (1995). A bias in the prediction of tastes, in: The Economic Journal 105, S.929-937. Rabin, M. (1993). Incorporating Fairness into Game Theory and Economics. American Economic Review Vol. 83(5), p.1281-1302. Weber, R. A. (2001). Behavior and Learning in the -Dirty Face- Game. Experimental Economics 4: 229-242. Weber, M. and Camerer, C. (1987). Recent developments in modelling preferences under risk. in: OR-Spektrum, S.129-151. Part II: Topics in Behavioral Public Finance F. Intertemporal choice - theory and evidence G. Nudge, intertemporal choice and social security H. Conventional theory of public goods - a review I. Reciprocity and the voluntary provision of public goods J. Sanctions and efficiency in the voluntary provision of public goods K. Behavioral economics and the willingness to pay/accept compensation for public goods L. Procedural Fairness and the deposition of atomic waste M. Tax compliance - conventional theory N. Tax compliance - a behavioral economics perspective O. Framing and political decisions P. Poorly informed voters and political outcomes FB 05 Gesellschaftswissenschaften Uni Kassel WiSe 2011/12 Univ-Prof. Bischoff Ivo