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Since the 1950s, behavioural economics and ‘orthodox’ economics have operated side-by-side. In pure theory, the descriptive models of decision-making developed by behavioural economists have complemented developments in orthodox theory, especially attempts at generalising expected utility theory undertaken during the 1980s. In empirical work, orthodox and behavioural theory provide complementary explanations for observed human action. Gradually, behavioural economics has taken its place as an accepted research program within mainstream economics. Following Daniel Kahneman’s 2002 Nobel Prize and Richard Thaler and Cass Sunstein’s publication of ‘Nudge’ in 2008, it has exerted growing influence over government policy. It is now essential that economics graduates can demonstrate a familiarity with both orthodox and behavioural economic analysis.

The course introduces behavioural economics in three parts. First, a brief overview of expected utility theory and game theory sets the scene for the emergence of behavioural economics. Second, the growth of behavioural economics is traced through Richard Thaler's, "Misbehaving: The Making of Behavioural Economics". Third, the core of the behavioural economics research program, heuristics and biases, is reviewed through Daniel Kahneman's, "Thinking: Fast and Slow". The course provides students with an opportunity to demonstrate a familiarity with orthodox foundations, the gradual development of behavioural economics and the core findings that constitute the underlying research program.