AØKK08117U The Psychology of Choice - Experimental Theory and Methods

Volume 2013/2014
MSc in Economics
All through our life, we have to make decisions. Whether it is attending to the signal at a crossing, finding a spouse, or investing hard earned money, the common denominator is the choice between options of different values. How we perceive the value of an option depends on how the option is processed by our cognitive system. To understand human decision-making it is therefore crucial to understand human cognition.

Explanations and predictions of people’s choices, in everyday life as well as in the social sciences, are often founded on the assumption that humans are rational. The definition of rationality has been much debated, but there is general consensus that rational choices should satisfy some elementary requirements of consistency and coherence in the assessment of values. In this course we will study decision problems in which people systematically violate these requirements of consistency and coherency, and we trace the violations to the psychological principles that govern the perception of decision problems and the evaluation of options.

The course will provide an overview of the field by focusing on the most central topics and experiments. Some of the topics we will focus on during the course are attention limitations, anchoring, loss aversion, bounded recursive thinking, the importance of context and reference points, and mutual mental states. The impact and relevance of seminal research in each of these topics will be made clear through hands-on experimental experience.

Learning Outcome
Content level:This course aims at introducing students to the interdisciplinary field of `the psychology of choice´, be it dependent (strategic) or independent of others’ choices (non-strategic). This interdisciplinary field has received wide recognition in recent years, for example by the award of the Nobel Prize in Economics 2002 to the psychologist Daniel Kahneman and the economist Vernon Smith. During the course students will learn how to investigate complex human behavior by means of empirically testable hypotheses and experiments. Students should understand how psychologists and economists attempt to understand the microfoundations of human choice behavior. Furthermore, it should provide an in-depth overview of the most important seminal works in the aforementioned topics covered during the course.

Methodological level: Students should learn to critically assess and relate the diverse ideas, concepts and theories developed in psychology and economics to explain humans’ choice behavior. Furthermore, they should learn (i) how experiments are used in social sciences to investigate human choices and (ii) how to analyze and present their results in a simple / clear, but not superficial way.

Syllabus will appear from The course website in absalon
B.Sc. in Economics or Psychology. Participation in the demonstration experiments as well as the assignments is required for admission to the final exam
Sound knowledge of statistical methods and tests (Econometrics A and B, Statistik I and II, or equivalent).
4 hours of lectures per week for 8 weeks.

The course has three elements. (i) Demonstration experiments: Students participate in demonstration experiments based on the above-mentioned topics. (ii) One assignment: During the course each student has to analyze with a small group of other students the data from one demonstration experiment, reflect on possible explanations for the observed behavior and present the results to the rest of the class. (iii) Lectures: We discuss seminal research, and explain the relevance of the demonstration experiments and how the data compares to findings in the literature.
  • Category
  • Hours
  • Exam
  • 3
  • Lectures
  • 32
  • Preparation
  • 171
  • Total
  • 206
7,5 ECTS
Type of assessment
Written examination, 3 hour under invigilation
3 hours written examination at Peter Bangsvej
Without aids
Marking scale
7-point grading scale
Censorship form
External censorship
100 % censurship
Exam period
Will be updated before the start of the semester
Same as ordinary. But if only a few students have registered for the re-exam, the exam might change to an oral exams with a synopsis to be handed in. This means that the examination date also will change.
Criteria for exam assesment
The Student must in a satisfactory way demonstrate that he/she has mastered the learning outcome of the course.