AREC 815: Experimental and Behavioral Economics Syllabus (Revised August 31, 2015)

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AREC 815: Experimental and Behavioral Economics

Syllabus (Revised August 31, 2015)

Department of Agricultural and Resource Economics


University of Maryland, College Park
Fall 2015

Course Information
Professor: Pamela Jakiela
Office: 2216 Symons Hall
Email: pjakiela@umd.edu
Office Hours: Thursdays from 10:00 AM to 12:00 PM
Lectures
Times: Monday, Wednesday from 2:15 to 3:30 PM
Location: 0115 Symons Hall
Course Website
http://www.pamjakiela.com/arec815.htm

Course Description
An overview of the design, implementation, and analysis of experiments motivated by be-
havioral economics, with a particular focus on experiments in various field settings. Topics
covered include social preferences, risk aversion, prospect theory, present bias, overconfi-
dence, and limited attention.

Course Objectives
1. To provide an overview of research in behavioral economics, with a particular focus
on those areas in which behavioral economic models of individual decision-making
are the most well-developed; and to provide a comprehensive introduction to the
experimental literature focused on testing behavioral economic theories of individual
choice.

2. To familiarize students with a range of tools and strategies useful for conducting
experiments and collecting individual decision data in lab and field settings.
The course will provide an overview of a broad set of topics/tools including:

• survey design
• pencil and paper experiments
• z-Tree
• oTree
• internet experiments

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• lab-in-the-field experiments
• decision experiments embedded in individual and household surveys

3. To equip students with the econometric tools needed to analyze data from experi-
ments, including the estimation of both experimental treatment effects and individual
preference parameters.
4. To provide students with opportunities to share and improve their research ideas,
improve their presentation and pedagogical skills, and work on a collaborative research
project.

Prerequisites
This course is intended for PhD students in the AREC and economics departments and the
business school. PhD students from other departments are welcome to enroll provided they
have adequate training in economics and math. Specifically, the following are required: a
one-year PhD-level sequence in microeconomics which covers consumer theory, game theory,
and mechanism design; and a PhD-level course in econometrics introducing linear regression
and maximum likelihood estimation. If you do not have this preparation, you cannot take
the course.
Problem Set 0 is available in the Arec815_2015 folder on the AREC shared (R) drive. It is
due on September 11. It should either be a review of what you already know, or that plus
a gentle introduction to LATEX and MATLAB. If you have trouble completing Problem Set
0, you will have a hard time making it through the semester.

Readings & Lecture Notes


Most readings are academic articles and working papers which are available online (either
through JSTOR or via the authors’ websites). A number of chapters from Handbook of
Experimental Economics, edited by John Kagel and Al Roth, and from Colin Camerer’s
Behavioral Game Theory are very highly recommended. Slides associated with the lectures
will be distributed at each class meeting and posted to the shared folder.
The following econometric references are not required, but will prove useful (both in this
class and in life):

◦ Angrist, Joshua, and Jörn-Steffen Pischke. (2008) Mostly Harmless Econometrics:


An Empiricist’s Companion. Princeton University Press.
◦ Cameron, Colin, and Pravin Travedi. (2005) Microeconometrics: Methods and Appli-
cations. Cambridge University Press.
◦ Train, Kenneth. (2009) Discrete Choice Methods with Simulation. Cambridge Uni-
versity Press. Available for free on Train’s website.
◦ Wooldridge, Jeffrey. (2010) Econometric Analysis of Cross Section and Panel Data.
MIT Press.

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Assignments & Grading
There are no exams in the course. In your future lives as PhD-holding economists, you will
not be evaluated using closed-book exams. All of the assignments in the class are intended
to build skills that you’ll use in the future as you do research, teach, present seminars, etc.
Your course grade will be based on your work on five problem sets, two written referee
reports, four in-class presentations, and a collaborative research project. In addition, the
aggregate value of your insightful contributions to class discussions will enter into your
grade in a non-linear manner.

• Referee reports: you will complete two 3-5 page referee reports in which you will
summarize a recent working paper, assess its strengths and weaknesses, and make
suggestions for improvement. Each referee report will be worth 10 points.

• Problem sets: you will complete five problem sets (not including Problem Set 0),
each worth 10 points. Each problem set will include both a theoretical component
and an applied component. You are encouraged to work in groups, but each student
must turn in his or her own write-up of the solutions.

• Class presentations: you will make four in-class presentations over the course of
the semester. Three of these presentations will relate to papers included in the syl-
labus — you will “teach” a paper and lead a class discussion of its strengths and
weaknesses. The final presentation will be on a research idea related to the course
material. Together, these presentations will account for 20 points.

• Research ideas: you will submit four 1–2 page research idea proposals over the
course of the semester. Together, these proposals will worth 10 points.

• Collaborative research project: over the course of the semester, you will work
together with other students in the course to design and pilot a lab experiment.
Further details will be provided in class. Your contributions to this research project
count for 10 points.

Sharp students will notice that this grading scheme leads to a total of 110 points. This is
intentional. Grades are meant to convey meaningful information about the quality of your
work, but I prefer to avoid giving low grades to students exerting effort in graduate field
classes.
Assignments will typically be handed out or announced during lecture. Supporting docu-
ments will be made available in the AREC shared folder for Arec815_2015.

Office Hours
Office hours are on Thursdays from 1-:00 AM to 12:00 PM. I will be away from campus
and will not be holding office hours on the following dates:

• September 3

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• September 17
• October 15
• November 26
• December 10

I encourage you to come by my office during office hours to introduce yourself or discuss
any topic related to the course material or economics more broadly. If you cannot attend
my drop-in office hours, please email me to set up an appointment.

Tentative Schedule
The schedule below is approximate, and will be updated as we progress through the
semester.

1. What is behavioral economics? What is an experiment? (1 class)


2. Distributional Preferences (7 classes)

(a) Simple Distributional Preference Experiments


(b) Are Distributional Preferences Rational?
(c) Reciprocity and Conditional Cooperation
(d) Fairness Ideals
(e) Other Behavioral Economic Motives for Sharing

3. Risk Preferences and Loss Aversion (5 classes)

(a) Experiments Measuring Risk Aversion


(b) Prospect Theory and Loss Aversion
(c) Incentives, Mistakes, and Stochastic Choice in Experiments

4. Present Bias (5 classes)

(a) Now vs. Later: the Quasi-Hyperbolic Model


(b) Commitment Devices
(c) Contract Design when Agents Are Present-Biased
(d) Measurement Issues: Is the Quasi-Hyperbolic Model Wrong?

5. Overconfidence and Competitiveness (1 class)


6. Projection Bias (1 class)
7. Salience and Limited Attention (1 class)
8. Persuasion (1 class)

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