Principles of Behavioral Economics

By Prof. Sujata Kar | IIT Roorkee

Learners enrolled: 284 | Exam registration: 1

ABOUT THE COURSE:

Behavioral economics is a new way of studying economics where economic decision making has been more humanized which helps us better understand the world around us. It questions some of the assumptions of standard or traditional economics and complement it with concepts borrowed primarily from the domains of psychology. This course introduces important concepts of behavioral economics like mental accounting, prospect theory, present bias, inequality aversion along with the tools used for developing such ideas. Further, it also deals with the applications of these concepts in diverse settings like stock market, health care, auctions etc.

INTENDED AUDIENCE: Any UG or PG student

PREREQUISITES: Basic knowledge of economics and mathematics up to ₁₂th standard will be beneficial

INDUSTRY SUPPORT: Government organizations like Niti Ayog, academic organizations, financial institutions and marketing/advertising companies look for individuals with expertise in the area of behavioral sciences.

Summary

Course Status :	Upcoming
Course Type :	Elective
Language for course content :	English
Duration :	12 weeks
Category :	Management Studies Economics & Social Sciences Economics Economics & Finance Managerial Economics
Credit Points :	3
Level :	Undergraduate/Postgraduate
Start Date :	21 Jul 2025
End Date :	10 Oct 2025
Enrollment Ends :	28 Jul 2025
Exam Registration Ends :	15 Aug 2025
Exam Date :	02 Nov 2025 IST
NCrF Level	4.5 — 8.0

Note: This exam date is subject to change based on seat availability. You can check final exam date on your hall ticket.

Page Visits

Course layout

Weeks 1& 2: Introduction: Introduction to behavioral economics; The neoclassical tradition; Methodology – types of empirical studies; Introduction to motivation and hierarchical needs; Achievement and craftsmanship: driving forces in economic behavior; Social drivers of economic decisions

Weeks 3 & 4: The Behavioral Alternative- Choices, Preferences & Values: The standard model in neoclassical economics; Axioms and assumptions of neoclassical model; Utility; Bounded rationality & heuristics; Biases; Heuristics and framing effects; Menu effects and expectations effects; Choice architecture and Nudges

Weeks 5 & 6: Decision Making under Risk & Uncertainty: Fundamentals of probability theory; Bayesian updating and confirmation bias; Prospects and risk attitude; Axioms, violations and anomalies of EUT; Prospect theory- evaluation, value function, and weighting function; Cumulative prospect theory; Criticism of prospect theory

Weeks 7 & 8: Mental Accounting: Introduction; Hedonic Editing Hypothesis; Hedonic Framing; Acquisition and transaction utility; Applications of mental accounting; Payment decoupling & budgeting; Behavioral & classical life-cycle theories; Choice bracketing; Dynamic mental accounting; Policy implications of mental accounting

Weeks 9 & 10: Intertemporal Choice Models: Introduction; Optimal consumption in the two-period model; Projection Bias; Discounted utility model; Anomalies in the discounted utility model; Time-inconsistent behavior; Naïve Hyperbolic Discounting; Naïve Quasi-Hyperbolic Discounting

Weeks 11& 12: Strategic Interaction: Introduction; Analytical Game Theory; Sequential game & types of games; Problems with classical game theory; Introduction to behavioral games; Ultimatum & dictator Games; Ultimatum & public goods games; Trust games

Books and references

1. Nick Wilkinson & Matthias Klaes /An introduction to Behavioral Economics /Palgrave Macmillan

2. Peter Diamond & Hannu Vartiainen (Ed.) /Behavioral Economics and Its Applications /Princeton

3. Edward Cartwright /Behavioral Econmics /Routledge

4. Colin F. Camerer, George Loewenstein & Matthew Rabin (Ed.) /Advances in Behavioral Economics/ Princeton

5. Peter E. Earl / Principles of Behavioral Economics: Bringing together old, new and evolutionary approaches / CUP

Instructor bio

Prof. Sujata Kar

IIT Roorkee

Dr. Sujata Kar is an Assistant Professor with the Department of Management Studies, IIT Roorkee. She is an economist by training with BSc (Hons.) in Economics from University of Calcutta, MA in Economics from Jawaharlal Nehru University and PhD from IIT Kanpur. She has taught in several public and private academic institutions in India like IIT Indore, NISER Bhubaneswar and IIFT. She has published research papers in various national and international journals. Her areas of interest include macro and monetary economics and the intersection of macro and financial economics. In 2023, she was one of the recipients of the ‘Scholarship Scheme for Faculty Members from Academic Institutions – 2023’ by the Reserve Bank of India. She also works on gender-based development issues.

Course certificate

The course is free to enroll and learn from. But if you want a certificate, you have to register and write the proctored exam conducted by us in person at any of the designated exam centres.

The exam is optional for a fee of Rs 1000/- (Rupees one thousand only).

Date and Time of Exams: November 02, 2025 Morning session 9am to 12 noon; Afternoon Session 2pm to 5pm.

Registration url: Announcements will be made when the registration form is open for registrations.

The online registration form has to be filled and the certification exam fee needs to be paid. More details will be made available when the exam registration form is published. If there are any changes, it will be mentioned then.

Please check the form for more details on the cities where the exams will be held, the conditions you agree to when you fill the form etc.

CRITERIA TO GET A CERTIFICATE

Average assignment score = 25% of average of best 8 assignments out of the total 12 assignments given in the course.
Exam score = 75% of the proctored certification exam score out of 100

Final score = Average assignment score + Exam score

Please note that assignments encompass all types (including quizzes, programming tasks, and essay submissions) available in the specific week.

YOU WILL BE ELIGIBLE FOR A CERTIFICATE ONLY IF AVERAGE ASSIGNMENT SCORE >=10/25 AND EXAM SCORE >= 30/75. If one of the 2 criteria is not met, you will not get the certificate even if the Final score >= 40/100.

Certificate will have your name, photograph and the score in the final exam with the breakup.It will have the logos of NPTEL and IIT Roorkee .It will be e-verifiable at nptel.ac.in/noc.

Only the e-certificate will be made available. Hard copies will not be dispatched.

Once again, thanks for your interest in our online courses and certification. Happy learning.

- NPTEL team

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