Behavioral Economics

Prospect theory, nudges, heuristics, time preferences, social norms.
TUTORIALS

Behavioral Economics

Prospect theory, nudges, heuristics, time preferences, social norms.

The Endowment Effect and Exchange Asymmetries

behavioral-economics
endowment-effect

Model the endowment effect using loss aversion from prospect theory, simulate the Knetsch mug-pen exchange experiment, and show how loss aversion reduces trading volume below the efficient Coasian prediction.

May 8, 2026

Hyperbolic discounting and time-inconsistent strategic behaviour

behavioral-economics
hyperbolic-discounting
time-inconsistency
commitment

Model quasi-hyperbolic (beta,delta) preferences in strategic settings, find Markov perfect equilibria of intrapersonal games, and compare exponential vs hyperbolic discounters in repeated interactions.

May 8, 2026

Mental accounting and strategic framing

behavioral-economics
mental-accounting
framing-effects
transaction-utility

Thaler’s mental accounting framework applied to strategic pricing: how framing purchases as bundled versus separated, or as gains versus reduced losses, systematically alters willingness to pay, modelled through transaction utility theory and simulated seller-buyer interactions.

May 8, 2026

Nudge theory and libertarian paternalism

behavioral-economics
nudge-theory
choice-architecture
default-effects

Thaler and Sunstein’s nudge framework modelled as a game between a benevolent choice architect and boundedly rational agents, with simulations of default effects on organ donation and retirement savings.

May 8, 2026

Prospect theory — loss aversion and probability weighting

behavioral-economics
prospect-theory
loss-aversion

Implement Kahneman & Tversky’s prospect theory value function and probability weighting in R, compare expected utility vs prospect theory predictions for common gambles, and visualize the S-shaped value function interactively.

May 8, 2026
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