15: Irrational Behaviour of Individuals: Implications for Economic Policy

Modern economic research has generated innumerable insights into the basic psychological principles of economic activity. Many of these findings are directly relevant for economic policy, as they apply to the ideal design of institutions, rules and laws. The assumption that human beings are not always rational and egoistic, but sometimes irrational, emotional and altruistic constitutes an important starting point. Up to now modern results of economic research, for example from behavioural or experimental economics, have only been utilised to a very limited extent by practical economic policy although possible areas of application are obvious. Examples may be health policy (How do you convince people to adapt a healthy life-style?), pension policy (How can you convince people to make provisions?) or general communication and implication of necessary reform. The seminar will focus on how individual decisions are made and how individual values develop. Moreover, we will investigate how entire societies act as a consequence of a series of individual actions and how they define their knowledge and values. The main goal of the seminar will be analysing and discussing of the question of how insights from behavioural economics can be applied to concrete political challenges.