Decision Sciences: Judgment and Decision Making

preliminary — subject to changes

Course Description

This interdisciplinary course is designed for students in both Management and Psychology programs because it is based on normative and descriptive theories and models from the fields of Economics and Psychology.

Topics inlcude

• Decision-making under risk and uncertainty
• Intertemporal decisions
• Expected value and expected utility theory, decision anomalies
• Bounded rationality
• Decision heuristics

Course Objectives

Students will learn normative and descriptive theories of judgment and decision-making, and their applications.

Course Materials

The course will follow:
Angner, E., 2021. A course in behavioral economics. 3rd ed. Red Globe Press. [BE] available at amazon
or, almost as good:
Angner, E., 2016. A course in behavioral economics. 2nd ed. Red Globe Press. (available in the library)

Recommended Literature

• Altman, M. ed., 2017. Handbook of behavioural economics and smart decision-making: Rational decision-making within the bounds of reason. Edward Elgar Publishing. [amazon]
• Bazerman, M.H. and Moore, D.A., 2012. Judgment in managerial decision making. 8th ed. John Wiley & Sons. [amazon]
• Camerer, C.F., 2004. Behavioral game theory: Experiments in strategic interaction. Princeton University Press. [amazon]
• Connolly, T.E., Arkes, H.R. and Hammond, K.R., 2000. Judgment and decision making: An interdisciplinary reader. 2nd ed. Cambridge University Press. [amazon]

• Binmore, K., 2008. Rational decisions. Princeton University Press. [amazon]
• Elster, J., 2008. Reason and rationality. Princeton University Press. [amazon]

• Gigerenzer, G.E., Hertwig, R.E. and Pachur, T.E., 2011. Heuristics: The foundations of adaptive behavior. Oxford University Press. [amazon]
• Gigerenzer, G. and Todd, P.M., 1999. Simple heuristics that make us smart. Oxford University Press, USA. [amazon]

• Gilovich, T., Griffin, D. and Kahneman, D. eds., 2002. Heuristics and biases: The psychology of intuitive judgment. Cambridge University Ppress. [amazon]

• Gintis, H., 2014. The bounds of reason. Princeton University Press. [amazon]
• Hastie, R. and Dawes, R.M., 2009. Rational choice in an uncertain world: The psychology of judgment and decision making. Sage Publications. [amazon]

• Kahneman, D., Slovic, S.P., Slovic, P. and Tversky, A. eds., 1982. Judgment under uncertainty: Heuristics and biases. Cambridge University Press. [amazon]

• Keren, G. and Wu, G. eds., 2015. The Wiley Blackwell handbook of judgment and decision making. John Wiley & Sons. [amazon]
• Lichtenstein, S. and Slovic, P. eds., 2006. The construction of preference. Cambridge University Press. [amazon]

• Loewenstein, G., 2007. Exotic preferences: Behavioral economics and human motivation. Oxford University Press. [amazon]

• Manktelow, K. and Galbraith, N., 2012. Thinking and reasoning: An introduction to the psychology of reason, judgment and decision making. Psychology Press. [amazon]
• Peterson, M., 2017. An introduction to decision theory. 2nd ed. Cambridge University Press. [amazon]
• Tversky, A. and Kahneman, D. eds., 2000. Choices, values, and frames. Cambridge University Press. [amazon]
• Wendel, S., 2020. Designing for behavior change: Applying psychology and behavioral economics. 2nd ed. O’Reilly Media. [amazon]

Texts for a more general (non-academic) audience

• Ariely, D. and Jones, S., 2009. Predictably irrational. New York, NY: Harper. [amazon]
• Brafman, O. and Brafman, R., 2008. Sway: The Irresistible Pull of Irrational Behavior. Doubleday Business, London. [amazon]
• Burton, R.A., 2008. On being certain: Believing you are right even when you’re not. New York: St. Martin’s Press. [amazon]

• Christian, B. and Griffiths, T., 2016. Algorithms to Live By. Henry Holt and Co. [amazon]

• Duke, A., 2019. Thinking in bets: Making smarter decisions when you don’t have all the facts. Portfolio. [amazon]
• Fisher, L., 2008. Rock, paper, scissors: game theory in everyday life. Basic Books. [amazon]

• Gigerenzer, G., 2007. Gut feelings: The intelligence of the unconscious. Penguin. [amazon]
• Gigerenzer, G., 2008. Rationality for mortals: How people cope with uncertainty. Oxford University Press. [amazon]
• Gigerenzer, G., 2015. Risk savvy: How to make good decisions. Penguin. [amazon]

• Guwande, A., 2010. The checklist manifesto. New York: Picadur. [amazon]
• Hallinan, J.T., 2009. Why we make mistakes: how we look without seeing, forget things in seconds, and are all pretty sure we are way above average. Crown. [amazon]
• Hardin, R., 2014. How Do You Know?. Princeton University Press. [amazon]
• Heath, Chip, and Dan Heath. 2013. Decisive: how to make better choices in life and work. New York: Currency. [amazon]
• Iyengar, S., 2010. The art of choosing. Twelve. [amazon]
• Jessop, A., 2018. Let the Evidence Speak: Using Bayesian Thinking in Law, Medicine, Ecology and Other Areas. Springer. [amazon]
• Lehrer, J., 2010. How we decide. Houghton Mifflin Harcourt. [amazon]
• Nease, B., 2016. The Power of Fifty Bits: The New Science of Turning Good Intentions Into Positive Results. HarperCollins. [amazon]
• Schwartz, B., 2016. The paradox of choice: Why more is less. Revised ed. New York: Ecco. [amazon]
• Service, Owain, and Rory Gallagher. 2017. Think small: the surprisingly simple ways to reach big goals. London: Michael O’Mara Books Ltd. [amazon]
• Thaler, Richard H., 2015. Misbehaving: The Making of Behavioral Economics. United States: W. W. Norton. [amazon]
• Thaler, R.H. and Sunstein, C.R., 2008. Nudge: improving decisions about health, wealth and happiness. Penguin. [amazon]

Course Requirements:

Students must read the corresponding chapters of the textbook before each session.

Course Prerequisites:

Students need to have passed an introductory statistics class.

Instructor Information:

Prof. Dr. Dennis A. V. Dittrich
dennis.dittrich@touroberlin.de
https://economicscience.net
Twitter: @davdittrich

You can always contact me via email or twitter. For meetings appointments can be arranged through the my webpage at: https://economicscience.net/appointments/

Updated information, links to the literature, additional materials, etc. can be found on my webpage as well.

Grading Guidelines:

(Class) participation (at the level of an “A”) requires that you attend class regularly and always contribute to the discussion by raising thoughtful questions, analyzing relevant issues, building on other’s ideas, synthesizing across readings and discussions, expanding the class perspective, and appropriately challenging assumptions and perspectives. You help your fellow students. Contributing in the aforementioned ways only (“B”) sometimes, (“C”) rarely, or (“D”) never diminishes not only your own but your fellow students learning opportunities.

You are allowed to bring a dictionary and pocket calculator to all exams. For the final exam only, you are allowed to bring a single-sided page DIN A4 with hand-written notes.

Workload

A typical 3 credit course requires 150 hours of your time. The table below identifies how I expect those 150 hours will be allocated. While you do not receive direct marks for reading, reading will affect your class participation mark (your ability to participate in class discussions and activities) and your final exam mark. While some weeks have more readings than others, you should be able to read the required reading in an average of 2 hours per week.

Topics and Reading Assignments

Session 1 - August 6

• Introduction
• Rational Choice under Certainty
  Readings
  • required: BE: 1 and 2

Session 2 - August 9

• Decision Making under Certainty
  Readings
  • required: BE: 3

Session 3 - August 10

• Probability Judgment
  Readings

  • required: BE: 4

  slides

Session 4 - August 12

• Judgment under Risk and Uncertainty
  Readings
  • required: BE: 5

Session 5 - August 13

• Rational Choice under Risk and Uncertainty
  Readings
  • required: BE: 6

Session 6 - August 16

• Decision Making under Risk and Uncertainty
  Readings
  • required: BE: 7

Session 7 - August 17

• The Discounted Utility Model
  Readings

  • required: BE: 8

• Intertemporal Choice
  Readings

  • required: BE: 9

Session 8 - August 19

• Game Theory
  Readings
  • required: BE: 10

Session 9 - August 20

• Behavioral Game Theory
  Readings
  • required: BE: 11

Session 10 - August 23

Final Exam

Topics and reading assignments are subject to changes.

Homework

You are allowed to hand in the solution to the problem sets jointly in groups of up to two students. Every member of the group should be able to explain their solution if asked to do so, otherwise no member of the group will be credited for the solution.

You will find the homework problems and other material for download in this pCloud folder. [Click Here!]

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