ECON224 - Beautiful Mind: Behavioural Economics

Year

Credit points

Campus offering

Prerequisites

Nil

Unit rationale, description and aim

Economists and other analysts working in government, charity, and the private sectors are increasingly required to understand the consumer behaviour of individuals as well as of markets. This unit will challenge the notion that individuals are self-interested, rational, utility-maximising individuals who make choices with careful deliberation. Instead, students will discover that individuals often make decisions with insufficient knowledge or feedback. Altruism, trust, temptations, and the desire for social norms underlie consumer choice, thus challenging the assumptions of the rational consumer upheld in neoclassical economic theory. This unit is not analysing departures, rather, challenging notions of rationality and unbridled self-interest and will introduce what is known as in Economic circles as, ‘the misbehaving consumer’. The aim of this unit is to contest students’ knowledge of the dominant economic paradigm and develop new approaches to understanding and analysing human economic decision-making.  

Learning outcomes

To successfully complete this unit you will be able to demonstrate you have achieved the learning outcomes (LO) detailed in the below table.

Each outcome is informed by a number of graduate capabilities (GC) to ensure your work in this, and every unit, is part of a larger goal of graduating from ACU with the attributes of insight, empathy, imagination and impact.

Explore the graduate capabilities.

On successful completion of this unit, students should be able to:

LO1 - Describe how neoclassical economics differs from behavioural economics (GA4, GA5)

LO2 - Explain behavioural economics concepts that influence both individual and group decision making (GA4, GA6, GA9)

LO3 - Interpret how the theory of behavioural economics and incentive mechanisms influence public policy (GA2, GA4, GA5)

LO4 - Evaluate behavioural approaches to critically analyse a real-world problem that relates to decision-making processes of individuals, business and/or public policymakers (GA2 GA4, GA5, GA6, GA8, GA9)

Graduate attributes

GA2 - recognise their responsibility to the common good, the environment and society 

GA4 - think critically and reflectively 

GA5 - demonstrate values, knowledge, skills and attitudes appropriate to the discipline and/or profession 

GA6 - solve problems in a variety of settings taking local and international perspectives into account

GA8 - locate, organise, analyse, synthesise and evaluate information 

GA9 - demonstrate effective communication in oral and written English language and visual media

Content

Topics will include:

• Introduction – Neoclassical vs Behavioural Economics
• Decision making under certainty
• Opportunity cost
• Sunk costs
• Decision making under risk and uncertainty
• Prospect Theory and endowment effect
• Reference Dependent Preferences and loss aversion
• Neuroeconomic aspects of decision making
• Mental accounting
• Intertemporal Choice and Hyperbolic discounting
• Behavioural Game Theory
• Social Preferences
• Herd Behaviour
• Implications for Public Policy 

Learning and teaching strategy and rationale

This unit is designed to be offered fully online and will include synchronous delivery of unit content, collaborative online learning activities and other technology-enabled learning synchronous and asynchronous learning opportunities to foster interaction between students.

This unit embraces a student-centred approach to learning where students could extend their understanding of economic principles such as thinking on a margin, evaluating opportunity costs, identifying cognitive biases and errors in thinking, the behaviour of crowds, and others, apply these principles to reality and conduct a systematic analysis of policy issues. By incorporating carefully designed visual, aural, reading and hands-on activities this unit will deliver a real-world learning experience that involves the cumulative and sequenced acquisition of skills and experience. Online streamed lectures will provide theory and content and live-streamed tutorials will provide opportunities to apply such skills and knowledge to case studies, undertake problem-solving activities, and debate and discuss economic ideas.

This is a 10-credit point unit and has been designed to ensure that the time needed to complete the required volume of learning to the requisite standard is approximately 150 hours in total across the semester. To achieve a passing standard in this unit, students will find it helpful to engage in the full range of learning activities and assessments utilised in this unit, as described in the learning and teaching strategy and the assessment strategy. The learning and teaching and assessment strategies include a range of approaches to support your learning such as reading, reflection, discussion, webinars, podcasts, videos etc.

Assessment strategy and rationale

The assessment items have been designed to cover a variety of tasks, support discipline accreditation standards, and enable differentiation of levels of achievement.

1. Analytical Task

It is considered by many organisations including the government, private sector, and charities that graduates who have studied behavioural economics will be confident in analysing consumer behaviour. Graduates may hold a number of professions including but not limited to; marketing, research, law, psychology, and education; and are required to have high-level analytical and communication skills across a variety of modes. Therefore, this type of assessment has been chosen to effectively measure the learning outcomes LO1 and LO2 and focuses on ensuring students utilise economic information and communication and other relevant technologies effectively. This style of assessment is excellent for broadening students’ skills with effective communication and for showing their ability to link economic concepts to real-world examples.

2. Comprehensive Research Assignment

This assessment effectively measures learning outcomes LO3 and LO4 and in particular focuses on ensuring students develop skills in locating, organizing, analysing, synthesising, and evaluating information. This assessment provides students with the opportunity to develop the capacity to interpret, translate, apply, critique, and evaluate economic information.

3. Final Exam

This type of assessment has been chosen to effectively measure the learning outcomes LO1 through to LO4 and focuses on testing the application of skills that students developed throughout the semester in solving problems and evaluating case studies. This assessment requires students to showcase their application of knowledge, skills, and depositions learned throughout the semester.

Overview of assessments

Representative texts and references

Altman, M. (2015). Real-World Decision Making: An Encyclopedia of Behavioural Economics. Santa Barbara, CA: Greenwood.

Angner, E. (2016). A Course in Behavioral Economics (2nd ed.). New York, Palgrave Macmillan.

Baddeley, M. (2018). Behavioural Economics and Finance. Taylor and Francis.

Behavioural Economics Team of the Australia Government (BETA). (2018). Behavioural Economics. Canberra. Available online: https://www.pmc.gov.au/domestic-policy/behavioural-economics

Durlauf, S. and Blume, L. (2016). Behavioural and Experimental Economics. London, Palgrave Macmillan.

Earl, P. (2016). Routledge Handbook of Behavioural Economics. Ordshire, RoutlegdeKirchler, E. and Hoelzl, E. (2017). Economic Psychology: An Introduction. New York, Cambridge University Press.Schiffmann, L. G. and Wisenblit, J.L. (2018). Consumer behaviour (12th ed.). Pearson Australia.

Thaler, R. H. (2015). Misbehaving: The making of behavioural economics. New York, W.W. Norton.

Voyer, B. G. (2015). Nudging behaviours in healthcare: Insights from behavioural economics. British Journal of Healthcare Management, 21(3), 130-135.