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Introduction to Behavioral Economics: Theory and Practice


East Baltimore
4th term
Health Policy and Management
3 credits
Academic Year:
2021 - 2022
Instruction Method:
Class Times:
  • Tu Th,  1:30 - 2:50pm
Auditors Allowed:
Yes, with instructor consent
Grading Restriction:
Letter Grade or Pass/Fail
Course Instructor:
  • Douglas Hough
Douglas Hough

Introduction to Microeconomics (212.619) or Applied Microeconomics for Policymaking (313.603), or equivalent


Mainstream neoclassical economics, as practiced by Milton Friedman and Paul Samuelson has provided a solid foundation for economic analysis for 150 years. Based on the concept of the rational decision-maker, this theory has survived the onslaught of alternative economic theories. In the past 30 years a new line of economic thought – behavioral economics – has emerged, and is gaining support within the profession because it appears to explain and predict human behavior more accurately than does neoclassical economics. We will examine the core elements of behavioral economics and discuss its strengths and weaknesses relative to neoclassical economics.

Explores the theoretical framework of behavioral economics, and applies that framework to issues in health and healthcare. Addresses elements of the theory of behavioral economics including: prospect theory, System 1/System 2 thinking, hyperbolic discounting, loss aversion, the endowment effect, framing and anchoring, mental accounting and commitment contracts, heuristics and biases, the power of the default, and pricing strategies. Applies these concepts to human behavior in general, as well as that of patients and physicians.

Learning Objectives:

Upon successfully completing this course, students will be able to:

  1. Explain the theory, tools, and concepts of behavioral economics, and how they relate to neoclassical economics and behavioral psychology
  2. Apply the tools of behavioral economics appropriately to analyze decision-making of individuals and organizations, with a focus on health and health care
  3. Integrate current research literature on behavioral economics, and apply the research to issues in health, health care, and the general political economy
Methods of Assessment:

weekly written assignments (40%); team research design project (40%); active class participation (20%)

Instructor Consent:

No consent required

Special Comments:

This course may be coupled with “Behavioral Economics in Health Decisions" offered 3rd term in IH as a de facto sequence