I’m teaching a course on behavioral economics at the Gokhale Institute this semester, and as you might imagine, it is a whole lot of fun. For a whole variety of reasons, and that’s a separate post in and of itself. But for now, I’ll tell you this much – the reason I have such a lot of fun is because teaching behavioral economics forces you to take stock of what you know to be true – before, during and after this semester is over.
And part of the reason teaching this course is so much fun is because you might think that when I speak about “know to be true”, I’m talking about ‘attacking’ the fundamental axioms of economic theory. Well, yes, but that would be a very one-sided class. What are the strongest arguments of the other side is a question that seems to have fallen out of favor in the world today – but one of the meta-lessons I hope to impart is just this one. That thinking along these lines is an important, and nowadays-forgotten skill.
Learn to ask how you might be wrong about whatever it is you think you know oh-so-well.
And so one required reading, which we’re positively dawdling over in class, is a blogpost which I’ve excerpted from below:
One could just as easily make fun of psychologists and sociologists for ignoring the rationality of much human decision-making, and price incentives in particular. Gary Becker made a splendid career out of that fact. We could easily write parallel op-eds saying all of psychology is wrong because they omit the fact that sometimes people do in fact add two and two to get four. But “rationalists” respect logic and their reader’s intelligence too much to do that: Psychologists’ omissions and simplifications likewise do not invalidate their observations about other aspects of behavior.
Or as I tell my students, ask yourself why a field of study called “Rational Psychology” should not exist, now that you’re a student of “Behavioral Economics”. You see what I mean when I say it is a whole lot of fun!
But within this blogpost, there is one paragraph that I need your help with.
Behavioral marketing, for example, is a cornerstone of the business school curriculum. I presume Dick’s class “Managerial decision making” (syllabus sadly not available) covers a lot of how to use psychology to become more rational. Behavioral finance is excellent marketing for active investment strategies, that’s for sure.
I asked my students to check if they can find the syllabus John Cochrane is talking about in his blogpost. And on a whim, I decided to try and hunt it down myself. The blogpost was written in 2015, but it would seem that even now, the syllabus is not available online. Richard Thaler’s faculty page, linked to in the excerpt above, does contain the link to the course, but that page itself is just blank.
I dug around a little bit, but was only able to find a write-up about the course (but do read it, it is very, very interesting):
Memories of Thaler’s teaching style have one common thread for all of his former students: laughter. They can’t describe a Thaler class without a smile. “He meanders up to the podium,” said Linnea Gandhi, MBA ’14, who has known Thaler as a student, a teaching assistant, and now co-professor as adjunct assistant professor of behavioral science at Booth. “Then he tells stories about foibles and fumbles, not just in companies but in his own life.” In most students’ recollections, this is done at a slight lean, against the podium, against the transparency machine in the old days, against whatever’s handy.
And I cannot tell you how much I enjoyed reading about this, since I tried a variant of this method in my own class earlier this academic year (plus, he’s talking about ‘what are you optimizing for?’, a question I have fallen in love with):
He once ran into a student who was studying for the final exam in his class and said he was busy outlining the articles they had read, a thought that appalled Thaler. “I want them to have to think about it,” he said, “not just memorize what was said.” So he started using a new type of exam. He would ask students to submit potential exam questions and then would circulate about 75 of those questions, saying the exam would be composed of (slightly edited) versions of these. The rule in generating questions was that they could not have a simple “correct answer” but rather force the students to ponder the material they had learned and then apply it to some novel situation.
“It’s not the most precise way of measuring how much they’ve learned,” he said. “But it’s the best way I have found to maximize what they learn when studying for the exam.”
But anyways, here’s what I would appreciate help with, if possible. Do any of you have a copy of the syllabus in question? This search brings up quite a few syllabi, but not the specific one I’m looking for. Of course, to be clear, it may not be available online at all, and it certainly isn’t necessary that syllabi are always made available. In fact, if you ask me, a syllabus is a bit like a straitjacket – there is an argument to be made for not having one, and winging it in a semester. A blogpost for another day, this thought.
But for now, this bleg: a copy of the syllabus for Richard Thaler’s class on Managerial Decision Making, s’il vous plait.