Course notes on behavioural economics and corporate decision making

Overview

In these online notes, I apply the insights from behavioural economics to understand how firms and their agents make decisions, what pitfalls may exist in organisational decision making processes and how those decision making processes might be improved.

These notes is based on a subject I teach in as part of UTS’s Graduate Certificate in Behavioural Economics. It is a half-size unit taught through a mix on online-self guided learning, online seminars and in-person weekend workshops. This subject also contained a section on behavioural finance that I have extracted and placed in a separate set of notes.

The Graduate Certificate is for post-graduates with no assumed prior knowledge of economics or behavioural economics. The subject on which these notes are based is taken after introductory economics and behavioural economics units.

The notes cover the following areas:

• Foundations of corporate decision making: Why do firms exists? How do firms make decisions? What drives a firm’s organisational architecture?
• Behavioural corporate decision making: What are some common failings of corporate decision making? What features of human decision making can drive this failure?
• Models and expertise: How can models and data-driven approaches improve decision-making? What are the conditions for the development of expertise?
• Forecasting: How can forecasting fail? What methods might improve our forecasts?
• Better decisions: How does information improve decision making? How can group decision-making processes be better designed?