Saturday, October 30, 2021

Some behavioral economics links for IB economics students

'Behavioral economics' is the new kid on the block for IB economics students (syllabus section 2.4).  Specifically the new IB Economics syllabus expects candidates not only to be able to explain  (AO2) but also to be able to respond to essay questions that have 'discuss', 'evaluate', 'examine', to what extent' etc. (AO3) as command terms (also using real world examples).  The following is directly from the 2020 syllabus:

Behavioral economics—limitations of the assumptions of rational consumer choice

  • Biases—rule of thumb, anchoring and framing, availability
  • Bounded rationality
  • Bounded self-control
  • Bounded selfishness
  • Imperfect information

Behavioral economics in action (HL only)

  • Choice architecture—default, restricted, and mandated choices
  • Nudge theory

There are plenty of sources for instructors to use beyond IB dedicated Textbooks and Study Guides.  I asked my Year 1 kids to prepare and present BE LOs in class.  I gave them lots of articles, papers, interviews, talks on these issues to consult.  I initially had assigned the works for all so that all would study and take notes on all issues (it would be like a flipped classroom thing that I rarely, if ever, attempt) and then, the day before the presentations, I narrowed down to a specific bias or issue for each student (or duet) to 'teach'.  It worked out ok; a few kids did a superb job.

There is one more site that I did not give my students before this assignment (now they are obviously aware of it) that I think may prove very useful for all.  It has tons of interesting and useful information, the surface of which I have only scratched.

These are a few links related to issues of (at least some) interest to IB Economics students:

Anchoring bias  

The availability heuristic

The framing effect

The restraint bias (self-control)

On bounded rationality

On heuristics - rules of thumb

On Herbert Simon

On Richard Thaler

On Daniel Kahneman

All of the above and much more are found here, at The Decision Lab.  Definitely worth visiting.

Another related and very interesting site worth visiting is BEworks (also a Canadian consulting firm; Dan Ariely is co-founder and chief behavioral scientist there - he has an interesting article in the 2021 BE works Choice Architecture Report that one may download for free.

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