COGNITIVE ECONOMICS AND FINANCIAL DECISIONS

Single discipline educational activity

Course Sheet

Course code:

ECO17

Academic Year of enrolment:

2018

Year of supply:

2019/2020

Type of Course:

Elective Course

Degree:

Course of 2nd Cycle Degree in MANAGEMENT, FINANCE AND DEVELOPMENT

Disciplinary Sector:

Political Economy

Location:

Credits:

Programme Year:

Professor and Collaborators:

BUCCIARELLI EDGARDO

Cycle:

First semester

Hours of classroom activity:

Individual study hours:

135

Prerequisites:

There are no specific prerequisites for this course. However, the basic knowledge of microeconomics and experimental economics is strongly recommended.

Objectives

EDUCATIONAL GOALS
In line with the general aims of the Master's Degree in "Management, Finance, and Development" (LM56), the course has the objective to provide students with the theoretical and
technical tools needed to understand the analysis of decisions on which the choices of economic agents depend.

EXPECTED LEARNING OUTCOMES

KNOWLEDGE AND UNDERSTANDING
After completing the course, students will be able to understand the theoretical and applied significance of cognitive sciences and, in particular, of cognitive economics. In addition, the knowledge gained can be used above all in the field of scientific and applied research, such as market and social research, as well as in the relationships between private companies and their task environment, in order to improve corporate and social decision-making processes.

ABILITY TO APPLY KNOWLEDGE AND UNDERSTANDING
After completing the course, students will be able to:
(1) interpret economics as an experimental science that has made available new protocols and new types of data deriving from laboratory and extra-laboratory methods for scientific purposes;
(2) interpret behavioural economics and cognitive economics, explaining their epistemological, theoretical, and methodological differences;
(3) document and explain the well-known systematic violations of the axioms of rational choice theory on which the standard approach to economics is based, as well as to discuss the models that implement these violations in advanced Microeconomics and Macroeconomics, and within economic and social policies;
(4) elaborate their personal conceptual maps of cognitive economics with an emphasis on financial decisions;
(5) conduct seminar activities, and design basic experimental studies aimed at implementing the cognitive approach in economics.

COMMUNICATION SKILLS
After completing the course, students will be able to recognise and use experimental and cognitive languages. Furthermore, they will develop the ability to present and discuss two or more economic models, identifying points of contact and contrast between them, and noticing possible criticalities.

Contents

Cognitive economics deals with studying and analysing decision-making processes and specific economic-and-financial decisions based on an interdisciplinary and intercultural approach that uses some analytical tools developed both by the social sciences and the cognitive sciences and, in particular, by decision theory, experimental economics, cognitive psychology, philosophy of mind, linguistics, artificial intelligence, and neuroscience. The main objective of cognitive economics is to understand and analyse the cognitive processes through which individuals collect, process, and use data and information in order to create knowledge, govern complexity, formulate their own preferences, and make economic and financial decisions. A further objective of the course is the understanding of the ways in which the subjective representation of reality affects the individual ability to make economic decision in the context of market dynamics.

Extended Syllabus

SYLLABUS
The syllabus focuses on the study of the following topics:
(1) Economics as an experimental science: methods and principles of experimental economics.
(2) The validity of the criticisms of the theory of rational choice: the weakness of axiomatic rationality; the systematic violations of axiomatic rationality; bounded rationality and finite cognition.
(3) The cognitive approach to economic phenomena: behavioural economics and cognitive economics: differences and similarities.
(4) Friedrich A. von Hayek and contemporary neurosciences: developments of neuroeconomics.
(5) Economics and Artificial Intelligence: the abductive approach and the theories of Herbert A. Simon.
(6) Economics and cognitive models: the developments of Simon's theories.
(7) Neuroscience and cognitive game theory.

Recommended Bibliography

READING LIST
(1) Paul Bourgine, Jean-Pierre Nadal (eds.) (2004), Cognitive economics. An interdisciplinary approach, Springer-Verlag, Berlin, Heidelberg.

For further studies:
(1) Herbert A. Simon H.A. (1955), "A behavioral model of rational choice", The Quarterly Journal of Economics, Vol. 69, n. 1, pp. 99-118.
(2) Herbert A. Simon (1959), "Theories of decision-making in economics and behavioral science", American Economic Review, Vol. 49, n. 3, pp. 253-283.
(3) Edoardo Datteri (2017), "Che cos'è la scienza cognitiva", Carocci, Roma.
(4) John von Neumann (2014) [1958], "Computer e cervello", Il Saggiatore, Milano.
(5) Friedrich A. von Hayek (1937), "Economics and knowledge", Economica, Vol. 4, n. 13, pp. 33-54.
(6) Friedrich A. von Hayek (2017) [1952], "The sensory order", The University of Chicago Press, Chicago.
(7) Esther-Mirjam Sent (2004), "Behavioral Economics: How Psychology Made Its (Limited) Way Back into Economics", History of Political Economy, Vol. 36, n. 4, pp. 735-760.
(8) Massimo Egidi, Salvatore Rizzello (2004), "Cognitive Economics", Volumes 1-2, Edward Elgar, Cheltenham (UK).
(9) Riccardo Viale (2012, 2014), "Methodological Cognitivism", Voll. 1-2, Springer-Verlag, Berlin Heidelberg.

Teaching Methods

Frontal and participatory lessons; scientific seminars; debriefing methods; continuous tutoring activity, that is, to follow the students individually or in group after their class, especially in the preparation of brief term papers and/or applied teamworks.

Evaluation methods

Verification of learning:

ASSESSMENT METHODS
(1) Learning assessment: experiments, ongoing practice exercise, and mid-term exams.
(2) Summative assessment: final test including closed and/or open-ended questions.
(3) Final assessment: marks expressed in thirtieths.

Università degli Studi
"G. d'Annunzio"

Chieti - Pescara

Aree