Harvard University
January 23, 2015 Psychology and Economics Economics 1030 Spring 2015 David Laibson and Tomasz Strzalecki Course Information Meeting time and location: Tuesday/Thursday 1­2:30, Maxwell­Dworkin G­115. The lecture will start promptly at 1:07. Instructors: ● David Laibson Littauer M–12, [email protected], 496­3402 Office hours by appointment: email Emily De Puy at [email protected] Additional walk­in office hours: email [email protected] for schedule. ● Tomasz Strzalecki Littauer 322, [email protected], 496–6284 Office hours by appointment: email [email protected] Additional walk­in office hours: email [email protected] for schedule. Section Leaders: ● Luca Maini ([email protected]): Head Teaching Fellow Office hours: TBA ● Benjamin Lockwood ([email protected]) Office hours: TBA ● Emily Wu ([email protected]) Office hours: TBA Sections: Five sections will be arranged. Sections will be used to discuss problem set solutions and to review mathematical tools used in class. Course web site: https://canvas.harvard.edu/courses/2048 Problem sets, problem set solutions, many readings, and handouts will be available on the course web site. Course Lottery: We will lottery the course. The structure that we describe below will produce a final course of 100 students. We want to get to know every student in the class and we can’t do this if the class has more than 100 students. We will conduct a lottery using names generated on sign­up sheets passed out at the first lecture. So please remember to sign your name up during the first lecture to secure yourself a place on the lottery list. If you can’t sign this sheet, email Luca Maini ([email protected]) to put your name on the lottery list. We will close this email sign­up at the end of the day on Thursday, January 29. Here’s how the lottery works. ● Students who have already completed the first semester of Ec10 (or equivalent) have first priority. ● Among the group who qualify in this way, we will randomly select 110 Harvard students (both undergraduates and graduate students). ● We will reserve 25 additional slots for “special cases” that were not randomly selected in the initial lottery (including both undergraduates and graduate students). If you think you are a special case, please write an essay (no more than two full pages) explaining why you should be given priority for one of these 25 slots. Send this essay to [email protected] by Thursday, January 29 (5:00 PM). If you send in an essay, we will also include you in the lottery for the “first 110 seats.” So students who write an essay will get two chances of admission: the lottery and then, if that doesn’t work, the essay­based selection process. ● We expect some of admitted students to decide not to take the course due to the normal attrition process during “course shopping.” So we anticipate a final enrollment of 100 students. ● The final enrollment list will be emailed to everyone who applies through one of these two channels by Friday, January 30, at 10:00 AM. ● If you have questions about the lottery/essay system please email: [email protected] Two other pieces of relevant information about the lottery: ● Our course will be offered next year. ● Sendhil Mullainathan, Matthew Rabin, Andrei Shleifer, and Jeremy Stein teach courses that have some overlap with ours. Students may take all of these courses for credit. However, the courses have some common content, so students should look carefully at the syllabi before taking two or more of them. Pass Fail: If the course is oversubscribed (i.e., at least 110 students enter the lottery), we will not allow students to take the course pass/fail. If the course is not oversubscribed, we will allow students to take the course pass/fail. Laptop Policy: Electronic devices may not be used in class unless you opt into a laptop seating section of the classroom (in which laptops and iPads may be used). If you are interested in sitting in this laptop section, please send Luca Maini an email no later than midnight, January 29 (so we can finalize the seating assignments ­­ see name tag and assigned seating discussion below). After January 29, no more laptop sign­ups will be accepted. Opting into the laptop section has no affect on your outcome in the course lottery. Prerequisites: We assume that students taking this course are familiar with introductory microeconomics, statistics, and calculus. If you don’t know multivariable calculus and you do know univariate calculus, we will teach you the multivariable methods. We will organize a review of multivariable calculus in section. This review will take place at the beginning of the semester. Students for whom multivariable calculus is familiar but rusty should take the review and should do a special (non­graded) problem­set on multivariable calculus. Note that multivariable calculus enables us to solve problems like: maxx,y f(x,y). Suppose f(x,y) = x + y + xy − x2 − y2. With a little help, could you write down the first­order conditions associated with this problem?1 The only formal prerequisite is the micro half of Ec10 (or an equivalent course in high school). Grading: Grades will be calculated from three weighted components: 1/4 problem sets, 1/3 midterm, and 5/12 final. We worry about grade inflation at Harvard and note that this course will take up a considerable amount of your time and will not be a grade gut. Midterm flexibility: Thesis writers and students with unavoidable conflicts (e.g., a Harvard­Dartmouth lacrosse game is an unavoidable conflict for a member of the Harvard lacrosse team) may substitute out of the midterm. For such students, the weights will instead be: 3/8 problem sets, and 5/8 final. Please email one of the teaching fellows no later than February 21 if you want to waive the midterm. Please explain why you are requesting to waive the midterm. Regrading of tests: If a portion of a test has been misgraded, bring this to our attention. We will then regrade the entire test (regrades sometimes lower a student’s score on a test). Class participation: We strongly encourage students to participate in class by answering questions that we pose and by posing questions of their own. We have the following goals in mind: 1. We want class participation to be a universal experience. 2. We want class participation to reflect the perspective of the typical student, and not just a small number of students who know the material inside and out. 3. We want all students to be actively thinking about what is happening in lecture. 4. We want students to come to class instead of relying on the web­postings of the lecture notes. Don’t be afraid to ask/answer questions in class. Attendance: Class attendance is required (we do mean this). Much of the learning that takes place in this course occurs during the lectures. For instance, we run numerous in­class experiments for which participation in the experiment is part of the learning experience. We understand that emergencies do occur from time to time, but we expect non­attendance to be rare. We start promptly at 1:07. Arriving late disrupts the class. If we notice that you have missed more than a few classes, or that you repeatedly arrive late, it may affect your final grade. 1
The first order conditions are 1+y­2x=0 and 1+x­2y=0 and the maximization point is (x,y)=(1,1). Name tags and assigned seating: To learn your names, we will create a name tag for each student in the course. We will randomly allocate these name tags, thereby creating an assigned seating system. (The seating within the laptop section will also be randomly allocated.) Do not take your name tags with you. We will collect the name tags after each lecture. Problem Sets: We will assign nine problem sets over the course of the semester. They will be made available one week before they are due. They will be due in class the Thursday after they are assigned. To calculate your problem set grade we will use your average grade from the seven problem sets on which you did best. Hence, you only need to hand in seven of the nine problem sets, (but we strongly encourage you to do them all and to hand them all in). Midterm: The midterm will be held in class on Thursday, March 12. Final: The date for the final exam will be set by the registrar. We will hold a standard 3­hour exam during the exam period. No Paper Option: Students will not have an option to write a paper for this course. Policy on Lateness: We will make problem set solutions available on the web immediately after each problem set is due (Thursday afternoons). Late problem sets will not be accepted. (Since late problem sets are not accepted, we've built a little flexibility into the system by requiring that you hand in only seven of nine problem sets.) Student collaboration and old problem set solutions: Students may collaborate on problem sets, but they should acknowledge their collaborators and describe the extent of their collaboration at the top of the relevant assignments. While collaboration is allowed, directly copying someone else's work is not. Problem sets may be discussed, but they should be written up independently. Copying someone else's work can result in a requirement to withdraw from the College. Finally, if you look at an answer key to an old problem set, please acknowledge this with your submitted answers. You won’t be penalized for looking at an old problem set solution, but we want you to follow standard academic norms and acknowledge your sources. Again, we remind you that copying answers verbatim from any source is not allowed. Course Overview: This course explores the ways that economists and psychologists have modeled human behavior. We will analyze the actual choices of economic decision­makers in the lab and in the field and ask whether observed behavior is consistent with the predictions of standard economic models. We will enrich the standard model by incorporating psychological phenomena, including bounded rationality, social preferences, and problems of self­control. Applications will include decision theory, game theory, marketing, persuasion, industrial organization, public finance, asset pricing, portfolio allocation, consumption, and savings. What you can expect of us: We’re committed to making this course intellectually rewarding, logically cohesive, idea­based (not memory­based), personally relevant and interactive. If it's not, please tell us and we'll try to do better. Feedback: There are three avenues for feedback that we can think of, and we encourage you to make use of them all. 1) We will conduct an anonymous survey during the semester. 2) We will sometimes be available for short discussions after class. 3) We will hold office hours. Please tell us what needs to be improved. We’re eager to hear your input.
Optional texts: Kahneman, Daniel. Thinking, Fast and Slow. Farrar, Straus and Giroux, 2013. Kahneman, Daniel and Amos Tversky. Choices, Values and Frames, New York: Russell Sage Foundation; Cambridge, U.K.; New York: Cambridge University Press, 2000. Baron, Jonathan. Thinking and Deciding, New York: Cambridge University Press, 1994 Gilboa, Itzhak, Making Better Decisions: Decision Theory in Practice, Wiley, 2010 Kagel, John. and Alvin Roth. Handbook of Experimental Economics, Princeton, N.J.: Princeton University Press, c1995. Thaler, Richard. The Winner’s Curse: Paradoxes and Anomalies of Economic Life, Princeton, N.J.: Princeton University Press, 1994. Baron, Jonathan. Thinking and Deciding, New York: Cambridge University Press, 1994 Web readings: Required readings will usually be available on the course web site, https://canvas.harvard.edu/courses/2048