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Learning Objectives

The aim is to enable students to decide if they consider the behavioral approach to macroeconomics useful and to be able to apply it to practical policy relevant issues if they think it is useful.

Following the course, students should be able to criticize and note the weakness of the approaches presented, and also to explain how they can be applied.


any undergraduate Macroecomics course


The aim of the course is to provide a hint of the potential usefulness of behavioral models, in which
agents are assumed to be irrational. The course will start with a review of the classic “Thinking Fas and Thinking Slow” by Daniel Kahneman.
The main focus will be on one kind of irrationality and discuss
implications in the context of the simplest available macroeconomics models. This (main) section is based largely on the work of Paul De Grauwe.

In addition (and briefly) Gabaix’s explanation of apparent myopia based on limited attention and finite processing capacity will be discussed.
Also the application of Kahnemen and Twersky to economics by Genaiolo and Shleifer will be discussed.
Finally examples of apparent bubbles described by Robert Shiller will be discussed.

The three additional topics will not be stressed on the exam which will focus on the main topic of the course (deGrauwe’s approach).

Robert Waldmann
Office 46a 06-72595741.
Office hours e-mail me for an appointment
Textbook: “Lectures on Behavioral Macroeconomics” Paul De Grauwe


Textbook: “Lectures on Behavioral Macroeconomics” Paul De Grauwe



Thinking, Fast and Slow
10 May 2012
English edition by Daniel Kahneman

Lectures on Behavioral Macroeconomics Condividi
di Paul De Grauwe
Princeton University Press, 2012


A Crisis of Beliefs: Investor Psychology and Financial Fragility
Nicola Gennaioli & Andrei Shleifer
11 settembre 2018

Irrational Exuberance: Revised and Expanded Third Edition Paperback –
Robert J. Shiller
August 16, 2016

Teaching methods

I will lecture and also perform numerical simulations. Students are invited to ask questions, make comments and propose applications of the models which will be considered. I hope everyone will speak some (but class participation is not graded)

Exam Rules

The course will be graded based on a written exam in which you will be asked to write 2 very brief essays.