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Faculty: Todd Rogers
This course has one central objective: It will improve your ability to design policies and interventions that improve societal well-being by leveraging these insights about human decision making (i.e., develop "nudges"). This will be accomplished by building on the toolbox that standard economics provides for influencing behavior (namely, incentives and information) with the insights from behavioral science. Over the last 30 years, behavioral scientists (psychologists, economists, political scientists, marketing researchers, organizational behavior scholar, etc.) have gained a deeper understanding of what motivates people, how they process information, and what non-economic features of the choice environment influence decisions. Many of their insights challenge traditional assumptions about rationality and self-interest. This research program (sometimes called “"”behavioral economics"or "behavioral science") has provided insights into how people's decisions deviate from "optimal" choices as well as the consequences of such deviations. There are three additional, though secondary, goals for this class. First, it will help you better understand the science of how humans make judgments and decisions. We will review research on human thinking from social psychology, cognitive psychology, political science, organizational behavior, decision science, and economics. In the process you will also learn how randomized experiments work and why they are critical for making inferences about causal relationships. Second, this course aims to improve the quality of your own judgments and decisions. People are poor intuitive statisticians, meaning that when they "just think" about situations for which some data or casual observations exist, they tend to make serious inferential errors, in turn leading to systematically biased decisions. We will study some errors that are particularly important for real world problems and look for easy-to-implement solutions. Third, this course aims to increase your familiarity with randomized experiments so you can be a smarter consumer of claims that interventions cause certain outcomes. The class will be suffused with randomized experiments and we will repeatedly discuss how confident one can be that intervention X causes outcome Y. Applications of the material covered in this course include policy design, healthcare, energy, politics, education, finance, negotiation, risk management, human resource management, organization of teams, among others.