After the successful completion of this part of the course:
Goal 1: The student will be able to engage in critical thinking. (S)he can detect systematic reasoning errors or biases.
Goal 2: (S)he can explain why these biases occur.
Goal 3: (S)he can explain how these biases lead to domains of irrationality.
Goal 4: (S)he can explain how we can protect our reasoning against a number of important biases discussed in this course and can apply these insights in practical situations.
Goal 5: (S)he can explain when and why consumers and investors often act irrationally, and how the economic actor can protect herself against these biases.
Goal 6: (S)he can distinguish scientific from pseudoscientific theories.
Goal 7: (S)he can explain what the core aspects of the scientific method are and how they protect against important biases.
In this part of the course you will learn how to detect recurring reasoning errors (biases), understand how these biases arise and how we can improve our thinking. We will apply these insights in an economic context by discussing irrational investor and consumer behavior. We will also apply these insights to science in general by analyzing how the scientific method protects against recurring biases and what distinguishes science from pseudoscience.
part 1: Introduction to and relevance of philosophy to economics students
part 2: What is philosophy of science?
Required reading: Okasha, S. (2002). Philosophy of science: A very short introduction. Oxford University Press. Chapter 1: "What is science?” pp. 1 – 17.
Lecture 2: Predictably irrational: An overview of recurring reasoning errors
Tutorial 1: Detecting biases
Lecture 3: The evolutionary origin of irrationality
Required reading: Kahneman, D. (2011) Thinking, fast and slow. Giroux. Part 1: “Two systems” – Chapter 1: “The characters of the story” pp. 19 – 30.
Lecture 4: Pseudoscience, insights from behavioral economics and other domains of irrationality
Required reading: Ariely, D. (2008) Predictably irrational: The hidden forces that shape our decisions. Harper Collins. Chapter 13: “Beer and free lunches: What is behavioral economics and where are the free lunches?” pp. 231 – 244.
Tutorial 2: Applying insights from behavioral economics
Lecture 5: How can we protect our thinking against irrationality?
Lecture 6: The importance of rationality
Tutorial 3: Exam preparation
Lecture 7: The scientific method and the demarcation criterion
Required reading: Boudry, M. “Loki’s Wage and Laudan’s Error,” in Philosophy of Pseudoscience: Reconsidering the Demarcation Problem, ed. Massimo Pigliucci and Maarten Boudry (University of Chicago Press, 2013) pp. 79–98.
Will be made available on Blackboard or in the university library.