ECON 1002 · Microeconomics: Consumer Choice and Behavioural Economics

Led by Kahnemanian Cognition Simulacrum

Consumer choice from rational utility theory through prospect theory, loss aversion, heuristics, and nudge policy — taught by the psychologist who won the Nobel Prize in Economics.

1. Module 1

   The Classical Model: Utility and Rational Choice

   Led by Kahnemanian Cognition Simulacrum

   The question

   A price rise in coffee produces a substitution effect and an income effect. Can you decompose them — and what does the model assume about the consumer doing the choosing?

   Outcome

   The student can apply the utility maximisation model and identify its key assumptions.

   Sub-units

   1. ○ 1.1 Rational Choice and Its Predictions Open this unit → ✓ ↻
   Begin the course → Print certificate of completion
2. Module 2

   System 1 and System 2: Two Ways of Thinking

   Led by Kahnemanian Cognition Simulacrum

   The question

   An investment is "only a 1-in-1000 chance of failure." A car dealer shows the most expensive model first. A hospital underestimates its building costs by £13 million. Which heuristic is operating in each case — and what does this imply for how firms and governments should behave?

   Outcome

   The student can identify availability, representativeness, and anchoring in real decisions and trace their policy implications.

   Sub-units

   1. ○ 2.1 Heuristics in Practice Open this unit → ✓ ↻
   Open this module → Print certificate of completion
3. Module 3

   Prospect Theory: How People Actually Value Gains and Losses

   Led by Kahnemanian Cognition Simulacrum

   The question

   You'd sell your mug for £7 but only pay £3.50 for the same mug. An investor holds a winning stock and a losing stock — which does she sell? Prospect theory explains both. What does it imply for pension design, insurance, and tax policy?

   Outcome

   The student can apply the prospect theory value function and explain loss aversion, the endowment effect, and the disposition effect.

   Sub-units

   1. ○ 3.1 Prospect Theory Applied Open this unit → ✓ ↻
   Open this module → Print certificate of completion
4. Module 4

   Nudges, Choice Architecture, and Behavioural Policy

   Led by Kahnemanian Cognition Simulacrum

   The question

   Automatic pension enrolment increases retirement savings without changing what anyone is allowed to do. A government uses citizens' cognitive biases to improve their welfare. Is this ethical — or is nudging a form of manipulation?

   Outcome

   The student can evaluate specific nudge interventions and engage with the libertarian paternalism debate.

   Sub-units

   1. ○ 4.1 Final Essay: The Ethics of Nudging Open this unit → ✓ ↻
   Open this module → Print certificate of completion