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Neuroeconomics

Syllabus for pre-PhD Distance learning course on Economics

NEUROECONOMICS

Arman Martirosyan, PhD, Associate Professor
Yerevan State University, Distance Learning Laboratory

1. Course module description
This course module deals with the interconnection between developments of economic thoughts and neuropsychology and neurobiology. The key target of the study is a man with his views and general outlook. The historical and economic analysis of evolution of economic thought is the key in this course module. The course module covers psychological relativistic and neuropsychological theories enriched by economic abstraction, deduction and other logical-analytical trends.

2. Objectives of the course module

2.1 To explain the role of Institutional theory in Economic Development.
2.2 To explain synthesis of psychology, neuropsychology and neurobiology in neuroscience and its role in the economics.
2.3 To introduce students with the core concepts of Neuroeconomics.
2.4 To give students an opportunity to understand the Neuroscientefic aspect of economics.

3. Assesment
Since this is a distance-learning course, assessment will be based only on students’ written work.
  • Weekly written essays – 60%
  • Final essay - 40%

4. Course module program

Class 1 The introduction in institutional economy
- Key Principles of institutional economy.
- The history of institutional theory.
- The evolution stages of institutionalism.
- The role of institutionalism in economics.

Readings:

  1. On Economic Institutions: Theory and Applications. Aldershot: Erdward Elgar, 1995.
  2. Hodgson J. M. Economics and Institutions. A Manifiesto for Modern Institutional Economics. Philadelphia, 1988.
  3. Galbraith John Kenneth. “Economics In Perspective: A Critical Hirtory” Boston 1987.

Assignment 1:
Please, answer the following questions (up to 5 pages):

  • What is Institutional Economy?
  • Analyze the evolution stages of the institutional theory.
  • Explain the (positive or negative) role of institutionalism in economics.

Class 2 Economics and psychology
- The role of psychology in the research methods of economy.
- The 2002 year Nobel Prize in economics – integration of the psychological research into the economic science, establishing laboratory experiments as a tool in empirical economic analysis.

Readings:

  1. Samuelson, P.A. (1938 ). A note on the pure theory of consumer behavior. Economia 1 , 61 – 71.
  2. Judgment under uncertainty: Heuristics and biases. Edited by D. Kahneman, P. Slovic, A. Tversky, Cambridge University Press 2001.

Assignment 2:
Please, answer the following questions (up to 5 pages):

  • What is the role of feelings in economic decision making process?
  • Give examples of laboratory experiments which approve or ignore some economic principles.

Class 3 Synthesis neuropsychology and neurobiology in neuroscience and its role in the economics
- A brief history of neuroeconomics.
- Neoclassical Economics.
- Cognitive Neuroscience.
- Setting the Stage for Neuroeconomics, Two Trends, One Goal.

Readings:

  1. Choices, Values, and Frames. Edited by D. Kahneman, A. Tversky, Cambridge University Press 2003.
  2. Montague , P.R. and Berns , G.S. ( 2002 ). Neural economics and the biological substrates of valuation. Neuron 36 , 265 – 284.

Assignment 3:
Please, answer the following questions (up to 5 pages):

  • Explain key principles of main streams in economics.
  • Explain the stages of synthesis in neuroscience.

Class 4 Neuroeconomics
- Terminology and basic principles.
- Major Findings in neuroeconomics.
- Neuroeconomics and the “Law”.

Readings:

  1. Adolphs, R. 2003 Cognitive neuroscience of human social behavior Nature Rev. Neurosci. 4, 165–178.
  2. Breiter, H. C., Aharon, I., Kahneman, D., Anders, D. & Shizgal, P. 2001 Functional imaging of neural responses to expectancy and experience of monetary gains and losses. Neuron 30, 619–639.

Assignment 4:
Please, answer the following questions (up to 5 pages):

  • What are the major findings in Neuroeconomics?
  • Explain brain perception of laws and social norms.

Class 5  A Neural Perspective on Interactions Between Cognition and Emotion
- Emotions, optimality and the brain, moral reasoning, economic decision making: fairness and intertemporal choice.

Readings:

  1. Camerer, Colin. 2003. “Dictator, Ultimatum, and Trust Games,” in Behavioral Game Theory: Experiments in Strategic Interaction. New York: Russell-Sage, chapter 2.
  2. Greene, Joshua D., Leigh E. Nystrom, Andrew, D. Engell, John M. Darley and Jonathan D. Cohen. 2004. “The Neural Bases of Cognitive Conflict and Control in Moral Judgment.” Neuron. 44:2, pp. 389–400.

Assignment 5:
Please, answer the following questions (up to 5 pages):

  • Explain the role of emotions in economic choices.
  • What is the difference between Cognition and Emotion?

Class 6 Economic Maps of Bounded Rationality
- The architecture of cognition: Two systems.
- Prospect theory: evolution and main principles.
- Attribute Substitution: A Model of Judgment Heuristics.

Readings:
Thaler, Richard H. Quasi Rational Economics. New York: Russell Sage Foundation, 1991.
Alevy, Jonathan E.; List, John A. and Adamowicz, Wiktor. “More is Less: Preference Reversals and Non-Market Valuations.” Working Paper, University of Maryland, 2003.

Assignment 6:
Please, answer the following questions (up to 5 pages):

  • Describe economic rationality in Classic and Keynesian theories.
  • What hypothesis do you prefer: limited rationality hypothesis or changeable rationality hypothesis? Please, substantiate your answer.

Class 7 Egocentric biases in availability and attribution
- Selective encoding and storage.  
- Differential retrieval, informational disparities, motivational influences.
- Experiments.

Readings:

  1. Judgment under uncertainty: Heuristics and biases. Edited by D. Kahneman, P. Slovic, A. Tversky, Cambridge University Press 2001. 
  2. Choices, Values, and Frames. Edited by D. Kahneman, A. Tversky, Cambridge University Press 2003.

Assignment 7:
Please, answer the following questions (up to 5 pages):

  • Explain experimental methods of analysis in economic or neuroeconomic researches.
  • Give examples of different economic choices and explain motivational influences of economic agents.

Class 8 Closing exam
Based on your interest, choose any topic discussed within this course module and write an analytic essay (10-15 pages).

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