Economics and Psychology

A woman selects apples at a fruit market.

A shopper chooses the best apples at the market. (Image courtesy of Makkai Bence. Used with permission.)


MIT Course Number


As Taught In

Spring 2004



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Course Features

Course Description

This course integrates psychological insights into economic models of behavior. It discusses the limitations of standard economic models and surveys the ways in which psychological experiments have been used to learn about preferences, cognition, and behavior. Topics include: trust, vengeance, fairness, impatience, impulsivity, bounded rationality, learning, reinforcement, classical conditioning, loss-aversion, over-confidence, self-serving biases, cognitive dissonance, altruism, subjective well-being, and hedonic adaptation. Economic concepts such as equilibrium, rational choice, utility maximization, Bayesian beliefs, game theory, and behavior under uncertainty are discussed in light of these phenomena.

Xavier Gabaix. 14.13 Economics and Psychology, Spring 2004. (Massachusetts Institute of Technology: MIT OpenCourseWare), (Accessed). License: Creative Commons BY-NC-SA

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