How do people make decisions? According to economic theory, by maximizing their own payoffs, and by doing so rationally and strategically. In this seminar, we will learn when this is, and when this is not the case.
We will begin by showing how, indeed, humans and many other species are equipped with psychological and neural processes that allow them to behave rationally (e.g., to approach rewards, avoid punishments, and weigh their trade-offs). We will then show how limited cognitive abilities and emotions, such as fear, regret, envy and schadenfreude (e.g., being happy for the losses of others) can frequently make us stray away from perfect rationality.
We will then move on to social decisions. We will play some experimental games and introduce basic concepts of game theory. This tells us how “rational” players should play, which we will compare to how people actually do play. In particular, we will learn about how interacting brains face social choices and how people can “read the mind” of others.
We will then take part in experiments on cooperation and see if we are as “selfish” as economic theory makes us out to be. We will cover a number of experiments showing that people cooperate with others even if they would earn more by exploiting them. We will thus face the question of why people cooperate and we will learn about social norms, guilt, power (e.g., showing off) and altruism. We will finally focus on the neuroscience of empathy, and explain how this can lead to compassion and prosocial behavior.
Learning outcomes
- to develop an understanding of fundamental notions of decision theory (widely used in economics/business, psychology and neuroscience);
- to demonstrate an awareness of the psychological and biological impact of emotions on decision making and prosocial behaviour;
- to critically evaluate data-based approaches to human behavior and decision making.