Standardized Outline for Courses
Part A: Basic Details
Behavioral Economics and Experimental Methods
Name of Course
(BEEMBJ24-6)
Course Instructor(s)
Sumit Sarkar (sumits@[Link])
(please provide email id)
Academic Associate(s)
(please provide email id)
Area Economics
Program BMJ and HRM
Term VI
Type of Course
Elective
(Core/Elective/Workshop)
Number of Credits 3
Number of Classroom
30
Contact Hours
The course cannot accommodate more than 30 students due
to constraints (lab size, subject pool and funding).
Course Pre-requisites (if any,
If there are more than 30 interested students, the top 30 will be
including cut-off grades in
chosen based on their CQPI till Term-3. If there is a significant
specific core courses)
difference in the average CQPI of BM and HRM, then the
difference will be factored.
Course Textbook Ogaki, M and Tanaka, S.C. Behavioural Economics
Course Handout to be
Provided Yes (Soft copy)
(Yes/No)
No. of Sessions to be taken by
0
Guest Faculty
Name of Guest Faculty (if
NA
identified)
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Standardized Outline for Courses
Part B: About the Course
Course Description The discipline of Economics has undergone a major
shift through the incorporation of behavioral
considerations – in the study of how economic agents
make decisions when rationality and foresight are not
unbounded and when psychological and social
considerations may play a role in decision-making.
Experiments are used to study decision-making and
behavior in markets, games, and in other strategic
situations.
The course will expose the students to experimental
methods on a variety of behavioral issues ranging
from risk preferences, probability perception,
information processing, social preferences, time
preferences, different biases, and roles of nudges and
choice architecture.
Takeaway for managers
Real-life decision-making is rarely perfectly rational.
Behavioral preferences and biases affect the decision-
making of customers, employees, suppliers,
competitors, and complementors. The course exposes
the students to behavioral aspects of decision-making
that they will have to deal with as practicing
managers.
A successful manager or a consultant is expected to
create ideas. However, by its very nature, it is not
possible to empirically verify whether a new idea will
work. Even if the idea is borrowed from a different
social or cultural or economic context it will lack
empirical backing in the context in which it will be
implemented. Experiments are a good way of testing
an idea in a particular context to see if it works or not.
In this course the students will learn and practice a
wide range of critical-thinking skills about
experimentation that can be applied across
management functions.
Course Objectives
1. Appreciate behavioral aspects of decision-
making.
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Standardized Outline for Courses
2. Teach students how to design experiments.
3. Help the students re-evaluate and re-examine
theory in light of experimental results that take
social and psychological considerations of
economic agents into account.
4. Create behavioral concepts on the basis of
experimental results.
Course Learning Objectives At the end of the course, the students should be able
to
Understand the fundamental behavioral concepts
underlying decision-making processes, and the
foundational methodology of experimentation in
social and management sciences.
Understand design choices (control, treatment,
information, incentive etc.).
Replicate experiments. (Apply)
Analyse experiment data and evaluate design
choices.
Create and run experiments, and use
experimental results in managerial decision-
making.
Who is the course suitable for? (for Anyone who intends to apply critical thinking in
electives only) creating ideas
Part C: AOL - Learning Goals Mapping at the Course Level
AOL Learning Goal (PLO) Relevance for Course (put a tick)
Decision Making Yes
Quest for Excellence Yes
Sustainability No
Global Mindset No
Ethical conduct No
Please indicate the rationale Response: The course requires students to apply critical
for choosing the specific thinking in experiment designing and to have a ‘Quest for
learning goal(s) for this course Excellence’ in applying experimental procedures.
Formulation of the research question and experiment
designing requires ‘Visualization of Problem’, and the
analysis of the experiment data requires the ‘Analysis of
Information’ and ‘Narrowing on the Solution’. Hence,
‘Decision Making’ has been included.
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Standardized Outline for Courses
Session Plan
Chapters from Course Textbook
Pedagogy (Case Studies/in-
and Reading Material other than class
Session Topic Course Learning Objectives
Session Case Studies exercise/questionnaire/prese
ntations)
Part I: Behavioral Economics – Theory, Demonstrative Experiments, and Experimental methods
1. Introduction to the course What is an experiment in economics? Ch. 1 of the textbook Demo experiments and
How does behavior differ What are the behavioral aspects of discussions
from the theory? decision-making? Double auction – replicating
Designing experiments – ceteris paribus Vernon Smith’s trading
Understanding treatment and control experiment
Replicating ‘traveler’s
dilemma’ experiment
2. Risk preference 1 – Understanding behavior under risk Ch. 3 of the textbook Demo experiment and
constant and increasing discussions
relative risk-aversion Replicating Holt and Laury
lottery choice experiment
Discussion of research paper
3. Risk-preference 2 ; Ch. 4 of the textbook Demo experiments and
(Anomaly) and prospect Risk behavior in the gain v. the loss discussions
theory; domain Replicating two Kahneman-
Allias paradox Loss aversion Tversky experiments
4. Probability perceptions - Understanding the probability weighing Holt and Smith (2009). An update Demo experiment and
Baye's rule v. heuristics function on Bayesian updating discussions
Replicating Holt and Smith
Lecture notes (and slides) red-cup lottery experiment
Discussion of research paper
5. Information and Understanding ambiguity aversion Ch. 3 of textbook and lecture notes Demo experiment and
ambiguity – Heuristics through the Ellsberg paradox (slides) discussions
and information Understanding herding, fads and going Replicating information
processing viral through information cascades. cascade in the lab
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6. Behavioral game theory – Deviations from game theoretical Ch. 8 of textbook Demo experiments and
Bounded rationality and predictions discussions
Social preference 1 Bounded individual rationality and “A theory of fairness, competition, Ultimatum game and dictator
inequity aversion and cooperation” game control;
Fehr and Schmidt Guessing game
7. Social preference 2 and Evidence of fairness concerns; Ch. 8 of textbook Demo experiment and
fairness concern – discussions
Advantageous inequity Visualization of experiment data “Effects of gain-loss frames on Replicating the ‘Trust game’
aversion advantageous inequality aversion” experiment
Boun My et al. Discussion of a research paper
8. Social Preferences 3 - Understanding trust as reciprocity of Ch. 8 of textbook Discussion of class experiment
Trust and reciprocity, kindness; results and discussion of a
Distributive justice “Efficiency and Distributional research paper
Understanding fairness-efficiency trade-
Fairness in a Bankruptcy
off in light of distributive justice
Procedure: A Laboratory
Experiment”
Acha, Sarkar and Guha
9. Nudges, choice Understanding biases, nudges, and effect Ch. 5 of textbook Discussion of research papers
architecture and framing - of choice architecture
Effect of social norms “The name of the game: Predictive
and roles on decision- Understanding the effects of gender and power of reputations versus
making culture on framing situational labels in determining
prisoner’s dilemma game moves”
Liberman et al.
Presentation of experiment data
“The impact of social approval and
framing on cooperation in public
good situations”
Rege and Telle
“Social roles and competitiveness:
My willingness to compete
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Standardized Outline for Courses
depends on who I am (supposed to
be)”
Zhang et al.
10. Choice architecture and Understanding the interaction between Ch. 5 of textbook Discussion of research papers
framing effects 2 fairness and market mechanisms
Impact of nudges and soft Determining the price of morality “Fairness as a Constraint on Profit
interventions on fairness Seeking: Entitlements in the
moral decision-making Analysis of experiment data Market”
Kahneman, Knetsch and Thaler
“Bargaining over Taking from A
Powerless Third Party”
Bhattacharya, Dugar and Sarkar
11. 1. Time preference - Understanding how behavioral factors “Time preference under cognitive Discussion of a research paper
Anomalies in time distort the time value of money load - An experimental study”
discounting. Israel, Rosenboim and Shavit Methodological discourses
Lab v. field
2. Methodological issues Within-subject and between-subjects Lecture notes (slides)
in conducting economic designs
and management science Issue of external validity
experiments - A round-up a. Writing instructions
b. Importance of monetary incentives
and repetition.
c. What constitutes deception
Comparisons of economics and
psychology experiments.
Understanding vignettes v. decision-
making involving opportunity costs
Experimenter demand bias and social
desirability bias
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12. Computerization of Programming multi-stage interactive z-tree manual Demo of computerized
experiments experiments using Z-tree experiment designing
Part II – Students’ practical work
13-14 Research proposal Experiment designing Proposal presentations Discussion, feedback, and
presentations (15 min per evaluation
group - 5-6 groups per
session)
15-18 Class experiments (30 Conducting experiments Practical/lab sessions Discussion, feedback, and
min per group - 3 (or 2) evaluation
groups per session)
19-20 Final presentations of Data handling and analysis Result presentations Discussion, feedback and
experiment results (15 evaluation
min per group - 5-6
groups per session)
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Standardized Outline for Courses
Details of Evaluation Components
Evaluation Module Yes/No Weightage for the PLO sub-dimension measured Average Number of Hours of Work
Evaluation Component1 Outside Classroom2
Mid-Term Yes 30% Quest for Excellence - Continuous 15-20 hours
Learning
Decision Making – Analysis of
Information and Narrowing on the
Solution
End-Term No
Quizzes No
Assignments Yes 30% Decision Making - Visualization of Each group will have to spend 20-25
(Formulation of research (15% on research question Problem (on formulation of hrs. on idea development, experiment
question and conduct of and design of experiment and research question and designing of designing, and conduct of
experiments) 15% on conduct of the experiment) experiments.
experiment) Quest for Excellence - Continuous
Learning and Standards of
Performance (on the conduct of
experiment)
Class Participation Yes 10% Quest for Excellence - Sharing of
Information and Knowledge
Presentation Yes 30% Quest for Excellence - Standards of Each group will have to spend 20-25
(Including data analysis and (10% on final presentation Performance (on final presentation hrs. on idea development, data
final report) and 10% on data analysis and and report) analysis, preparation of reports, and
10% on final report) Decision Making – Analysis of presentation.
Information and Narrowing on the
Solution (on data analysis)
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