Behavioral Industrial Organization

Course Description: 

To familiarize you with the issues, results, and methods of applying behavioral-economics models
of individual decisionmaking to industrial organization. The course will be exclusively about
economics questions, not business strategies such as marketing.

Learning Outcomes: 

Understanding the basic implications of psychological phenomena for competition between firms, for the market interaction between firms and consumers, and for optimal policy interventions. Learning techniques to solve behavioral industrial organization models. Developing an ability to spot when psychological phenomena may be important in a market situation, to think about how to conceptualize the situation, and to identify the types of data that are useful for quantifying the importance of the phenomenon. At the end of the class, you should have a good idea of the research frontier in behavioral industrial organization, be capable of evaluating research in the field, and to start own projects in the area in case you are interested.


The grade will be determined 60% by the final and 20% each by the idea logs.


Preparation in the following is necessary or useful to get the most out of the course. I will not enforce formal prerequisites; it is your responsibility to judge whether you are prepared, and to prepare sufficiently if you are not. Microeconomics. Basic game-theoretic concepts and standard oligopoly models such as Hotelling, Salop, Cournot, and Bertrand. Behavioral Economics. You should know about hyperbolic discounting, loss aversion, projection bias, etc., and basic issues and modeling ideas in behavioral economics. Industrial Organization. It would be useful to have taken Industrial Organization as well, but it is not essential.

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