Behavioural Economics in a Spreadsheet: Present Bias, Loss Aversion, Prospect Theory & Nudge Experiments
Model how real people choose: hyperbolic discounting, loss aversion, probability weighting, anchoring and defaults, with every cell checked as you go.
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About this course
In this course you put behavioural economics into cells, using a fictional policy lab and fictional data. You compare exponential, hyperbolic and β-δ discounting and show a preference reversal. You simulate a present-biased saver against a commitment device and chart the gap. You build the prospect-theory value function with loss aversion, value mixed gambles, compute decision weights and certainty equivalents, and test how framing changes the felt value of gains and losses. Then you analyse an anchoring experiment with means, standard deviations and effect size, measure the uplift of an opt-out default with a confidence interval and quantify the decoy effect on choice shares.
Lessons
- Exponential vs Hyperbolic Discounting: β-δ Weights & Preference Reversals Pro
- Present Bias & Saving: a β-δ Saver vs a Commitment Device Pro
- The Value Function: Diminishing Sensitivity, Loss Aversion λ & Mixed Gambles Pro
- Probability Weighting: Decision Weights, Long Shots & Certainty Equivalents Pro
- Framing & Mental Accounting: Segregate Gains, Integrate Losses Pro
- Anchoring Experiment: Group Means, Effect Size d & the Anchoring Index Pro
- Defaults & Nudges: Opt-In vs Opt-Out Uptake, Uplift & a Confidence Interval Pro
- Decoy Effect & Choice Architecture: Share Shifts and a Policy Summary Pro