23714 Rationality and Incentives
Warning: The information on this page is indicative. The subject outline for a
particular session, location and mode of offering is the authoritative source
of all information about the subject for that offering. Required texts, recommended texts and references in particular are likely to change. Students will be provided with a subject outline once they enrol in the subject.
Subject handbook information prior to 2024 is available in the Archives.
Credit points: 3 cp
Result type: Grade and marks
There are course requisites for this subject. See access conditions.
Description
This subject will introduce students to the foundations of economics as a behavioural science: economics as a theory of incentives. Students will learn about the different notions of rationality in economics and what it means to consider agents as rational and driven by incentives.
Subject learning objectives (SLOs)
| 1. | analyse the nature of the incentives of different agents in an economic situation |
|---|---|
| 2. | evaluate the likely effect of changes in policy and incentives on behaviour |
Contribution to the development of graduate attributes
Modern Economics is to a large extent a theory of incentives and how they shape behaviour. This subject will train student into understanding the key insights of the economic approach to make sense and predict human behaviour. Students will learn to break down the different incentives present in a situation for all the different agents taking part in it. They will learn to assess how these incentives can be expected to shape their behaviour and how changes in incentives may change behaviour, assuming that agents are rational. The analytic skills gained in this unit are of critical demand in the industry.
This subject contributes to developing the following graduate attribute(s):
- Intellectual rigour and innovative problem solving
- Professional and technical competence
Teaching and learning strategies
This subject is taught through a blend of online resources, self-directed study and seminars. Subject content will be presented to students in a variety of formats (lecture slides, notes, videos, articles) and delivered both online and in-class. At the beginning of the unit, students are expected to review materials and complete tasks on their own before attending a weekly Zoom review session with the lecturer. Materials will be provided to students on the learning management system, but students are also expected to seek information independently. The specific insights from economic thinking will be taught in from principles to applications with many discussions/examples of puzzles where economic thinking cast a useful light to understand a problem.
At the end of the unit, seminars offer face to face interaction to review the material and engage students with the material. Seminars are highly interactive. Students will learn about traditional economics concept of rationality and incentives. Students will receive individual feedback in-class from the lecturer.
Content (topics)
- The notion of incentives
- The different types of incentives
- Rational behaviour
- Designing behavioural change for rational agents
Assessment
Assessment task 1: Online Quiz (Individual)*
| Objective(s): | This addresses subject learning objective(s): 1 and 2 |
|---|---|
| Weight: | 35% |
| Criteria: |
*Note: Late submission of the assessment task will not be marked and awarded a mark of zero. |
Assessment task 2: Report (Individual)
| Objective(s): | This addresses subject learning objective(s): 1 and 2 |
|---|---|
| Weight: | 65% |
| Criteria: |
|
Minimum requirements
Students must achieve at least 50% of the subject’s total marks.
Recommended texts
Optional:
Microeconomics (3rd edition) by Daron Acemoglu, David Laibson, and John List.
Microeconomics: An Intuitive Approach with Calculus (Edition 2) by Thomas Nechyba.
Economics, Organization & Management by Paul Milgrom and John Roberts.