WELCOME TO

MG455
BEHAVIOURAL DECISION SCIENCE FOR MANAGEMENT AND POLICY

Dr Barbara Fasolo

Dr Valentina Ferretti

Lecture: Thursdays 12:00-14:00

Classes: Wednesdays

Whats this course about?

Behavioural sciences are becoming ever more influential. This course focuses on behavioural decision
science, the first behavioural science that started the field more than 50 years ago with Ward Edwards.
This course aims to improve your ability to make decisions or help others make better decisions, with the
help of system 1 the fast, intuitive and (before this course) automatic way our brain makes decisions,
and evaluates others decisions. Through interactive classes and lectures you will become a better
intuitive decision maker.

WANTED! Behavioural clips from Radio/Newspapers/Movie/Songs/Artwork/Architecture/ to

demonstrate a behavioural phenomenon. To enter in our "BBC" (Best Behavioural Clip) competition,
submit your clip on Moodle and by email to Barbara, Valentina and Keith. The best entries of the week
will have a spotlight in lecture. All will be accessible on Moodle. When you submit your entry, please
include your name, your class group, and the name of the behavioural phenomenon you think this
clip demonstrates. On Moodle your colleagues will comment or add to your ideas, too. Start clip-ping!
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Who can take this course?

You, if you have a strong passion for behavioural science and a keen interest in the psychology of decision
making and applications for management and policy. We used to teach the same course to
undergraduates and postgraduates separately but we realized that the course was best taught together.
Think broad and leverage diversity is an important lesson of decision science, so we are applying it in
this course by teaching together new Masters students who are in their first term at LSE and advanced
3rd Year LSE Undergraduates. This mix of students is deliberately chosen for this course, to enhance your
ability to learn from each other.
Teaching
10 weeks of lectures, 9 weeks of classes, one week in the Behavioural Research Lab (W8) and one week
to wrap all up (W11). A reading week will take place in W6. There will be no teaching during this week and
you will be revising and working on your formative assignment. To avoid hindsight bias and maximize
interaction, all lecture slides, online readings and other course related material will be posted on Moodle
AFTER EACH LECTURE.

What happens in the lectures?

In Barbaras lectures, designed for aspiring decision scientists, we examine how behavioural decision
science came about and review a number of descriptive theories of decision making. We also focus on
empirical research on heuristics, biases, decision style and other phenomena which can unconsciously
affect decisions. Lectures are taught at an advanced level and experientially (e.g., in-class experiments)
and as a student you commit to interact.
Classes
In our Classes you review and apply the previous weeks lecture to personal, managerial or policy
decisions. Each week, your commitment is to answer to questions given before class, and bring them to
class. The most critical part for the classes, and this course, is that you read the assigned reading, weekby-week. Readings are critical to ensure the classes are engaging and productive, and for you to ask
clarification questions along the way (and before the course is over). Classes are uniquely designed around
three different clusters of students: a) Advanced Undergraduates b) Decision Science Masters students,
c) MSc students in any other degree. You will therefore be assigned to the class appropriate to your
cluster, enjoy them!

What happens in the Behavioural Research Lab experience?

Because behavioural science started with laboratory experiments, and you might use the lab for your
dissertation in the summer, you are invited to the Behavioural Research Lab (BRL). This will give you the
experience (as researcher and participant) of what is behind the scenes of behavioural science and
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insights. You will visit the lab, instead of having a lecture in week 8. Then you will write up your experience
as a short (500 words) Lab Report
The lab is in the basement of Clement House. Dr Tamara Ansons, our BRL Administrator , will come meet
you and talk about it in Week 7.
Course team
Who

Email

Office

Office hours (MT)

Dr Barbara Fasolo*

b.fasolo@lse.ac.uk

NAB 3.15

Book by email/LfY

v.ferretti@lse.ac.uk

NAB 3.04

Book by LfY

h.s.burr@lse.ac.uk

NAB 4.11

Monday Friday

Lectures & classes with

presentations (W7, 10 and
11)
Dr Valentina Ferretti**
Classes (W2,3,4,5 and 9)
Henrietta Burr***
Programme Administrator

Laura Canter***

10:00-12:30 and 14.30

16.30
l.canter@lse.ac.uk

NAB4.11

Programme Coordinator

Monday Friday
10:00-12:30 and 14.30
16.30

* course co-ordinator, lecturer and class teacher, ** class teacher, *** admin support from signing up to the course
to Moodle problems (e.g. Material posted wrongly or missing) , Reading Lists, Feedback release

Teaching Team Bios

We recently received nominations as best teachers for the LSE Student-Led Teaching Excellence Awards:
Valentina in 2016 as Inspirational Teacher and Barbara in 2015 as Excellent Teacher. We will do our best
to make these courses inspiring and motivating for you!

Dr Barbara Fasolo (lectures and classes)

Dr Barbara Fasolo is Associate Professor in Behavioural Science in the Department of
Management of the London School of Economics and Political Science. She currently
serves as Head of the Behavioural Research Lab, Director of the Executive Master in
Behavioural Science, and on the Department of Health Behavioural Insights Expert
Advisory Panel. Barbara is an expert in behavioural decision-making, behavioural
change, behavioural public policy, with a specific interest in digital nudging and choice
architecture. Her background is inter-disciplinary: Economics (BSc, Distinction, Bocconi
University, Italy), decision sciences (MSc, Distinction, London School of Economics,
UK), and experimental psychology (PhD, University of Colorado at Boulder, USA).
She was Visiting Professor at IESE Business School (2012/13, Barcelona), Expert-in-Secondment for the
European Medicines Agency (2009-12, London) and Post-Doctoral Fellow at the Max Planck Institute of
Human Development (2002-04, Berlin). Barbaras research has been published in more than 50 outlets,
including leading academic journals, (PNAS and the Annual Review of Psychology), books and invited
chapters, and has been covered in media outlets such as The Harvard Business Review. She is a member
of the Behavioural Science and Policy Association, the Society of Judgment and Decision Making and the
European Association of Decision Making. Her lab, online and field research studies choices faced by
patients, consumers, and professionals in the public (e.g., for the European Medicines Agency, the Kings
Fund, and the European Commission) and private sector. Barbara consults individuals and organisations
keen to study and improve their decision behaviour, and design smart and kind choice architecture.

Dr Valentina Ferretti (class teacher)

Dr Valentina Ferretti is a Post-Doctoral Research Fellow in Decision Science in the
Department of Management of the London School of Economics and Political
Science. Her expertise focuses on two main themes. The first one is Decision
Analytic modelling of judgments that can be used in public policy making and
management contexts. The second one is economic appraisal of policies and
impact assessment of projects and programmes, particularly in the field of
complex environmental and social systems. From the synergic blend of these two
areas, her research interests focus on developing judgement-based analytics for
supporting innovative policy design. Her research has been published in Journals
such as the European Journal of Operational Research, Decision Support Systems, Land Use Policy,
Ecological Indicators, Environment, Development and Sustainability and Journal of Multi-Criteria Decision
Analysis, to name the most relevant ones. One of her papers, concerning the integration of Multicriteria
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Analysis and Geographic Information Systems for locating undesirable facilities, was awarded the Wiley
Practice Prize in 2011. Her Ph.D. thesis got the Giorgio Leonardis prize (best Ph.D. thesis award) in 2012
within the XXXIII Annual Scientific Conference of the Italian Association on Regional Sciences. Dr Ferretti
has held research visiting positions at the London School of Economics (UK), at the University of Pittsburgh
(USA), at the University of Southern California (USA), at the CNRS LAMSADE Laboratory in Paris (France),
at Ecole Centrale (Paris, France) and at the Faculty of Geo-Information Science and Earth Observation ITC, University of Twente, Enschede (The Netherlands).
In the above mentioned fields, Dr Ferretti has experience in both research and teaching at different levels
(i.e. undergraduates, masters and executive education).

Dr Richard John (Guest Lecturer from University Southern California)

Richard S. John is currently Associate Professor in the Department of
Psychology at the University of Southern California and Associate Director
for Strategic Planning and Transition at the Center for Risk and Economic
Analysis of Terrorism Events (CREATE). His research focuses on normative
and descriptive models of human judgment and decision making and
methodological issues in the application of decision analysis and
probabilistic risk analysis (PRA). Richard has consulted on a number of
large projects involving expert elicitation, including analysis of nuclear
power plant risks (NUREG 1150) and analysis of cost and schedule risk for
tritium supply alternatives. Richards current research focuses on
adversary risk analysis and legal decision making. He has published extensively, with a current h-index of
33. Richard received his PhD. in quantitative psychology from the University of Southern California in
1984, M.S. in applied mathematics from the University of Southern California in 1983, and B.S. in applied
mathematics (summa cum laude) from the Georgia Institute of Technology in 1976.

Preview of Course Structure

This term, and in this course, we will follow this six steps framework:
1.

Intro to Decision Science

2.

Structuring and Framing Decisions

3.

Deciding with Conflicting Objectives

4.

Deciding with Risk and Uncertainty

5.

Deciding in Groups

6.

Conclusion and connections

This course is a natural complement, and preparation for, MG456 which aims at improving the other side
of the decision-making brain the slow and analytic ability to make strategic decisions via modelling and
decision analytic techniques. To emphasize the connection between these two courses, MG456 will follow
the same 6 steps. In MG456, these six steps revolve around how to improve decisions via modeling and
analysis.
Summative Assessment (How will I be examined?)
1. Coursework (10%, 500 words) due Tuesday 6 December (week 11) at 11am: Individual Lab
Reports 1 x 500 words lab report. The MG455 Lab Report will describe what you have experienced
in the lab, the study that was conducted (with reference to at least one scholarly paper written
on this topic) and your reflections on the lab visit. More instructions will be given closer to the
date in which it is due. You also have the opportunity to ask questions and have feedback on the
structure of the lab report in Week 9. To prepare ahead of the lab visit please read attentively
the methods section of the empirical papers assigned week by week!
2. Essay (90%, 3000 words) 1x Two-section essay due before and no later than week 7 of LT, with
the final deadline being Monday 20 February at 11 am. The essay will include two parts. In the
first part (no more than 1,000 words), you will be asked to prepare a memorandum to the CEO of
an organisation (be it public or private, an NGO, a business corporation or a third sector enterprise
a REAL organization of your choosing; the more you know about this person and organisation,
the better) giving a behavioural insight on some decision to make, or situation to improve, or goal
to achieve. In the second part of the essay (no more than 2,000 words), you will justify the specific
recommendations presented in the memorandum with reference to behavioural and decision
science literature and theories covered in the course. The first part of the essay will count for 25%
of your mark while 75% will come from the second part.
For all work, the submission rules and mark scheme are on the Moodle page for this course. The
criteria will be also explained to you in class and available on Moodle. You have to submit two
hard copies (to the DoM reception on the 3rd floor of NAB) as well as electronically via the portal
that will be available on the course Moodle page. The copies have to be identical.
Like for tax returns, you need to submit on time. If you dont, the LSE applies the following penalty:
Five marks out of 100 will be deducted for coursework submitted within 24 hours of the deadline
and a further five marks will be deducted for each subsequent 24-hour period (working days only)
until the coursework is submitted. After five working days, coursework will only be accepted with
the permission of the Chair of the Sub-Board of Examiners.
You must ensure that all work is properly and consistently referenced
(http://www.lse.ac.uk/library/usingTheLibrary/training/citing_referencing.aspx) and that it is
genuinely yours. All work you submit per school policy is submitted to the Turnitin plagiarism
software to identify plagiarised text.
If the work contains plagiarism the School refers it to an Assessment Misconduct Panel, which can
result in severe penalties. This is what Plagiarism is:
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'All work for classes and seminars as well as scripts (which include, for example, essays,
dissertations and any other work, including computer programs) must be the student's own
work. Quotations must be placed properly within quotation marks or indented and must be cited
fully. All paraphrased material must be acknowledged. Infringing this requirement, whether
deliberately or not, or passing off the work of others as the work of the student, whether
deliberately or not, is plagiarism.

Formative Assessment (i.e., How will I get ready for the summative assessment?)
Formative (as opposed to summative) is the work you submit to get feedback. There is no mark, only an
indication of how well youre doing on the different criteria that are important. The criteria are going to
be on Moodle.
Every week you work as a group and present answers to questions set, and in class we will give you
feedback which you can use to improve your understanding of the material, and as a result your final
assessment.
During reading week you will submit your individual 500-word plan for the final essay that counts for your
mark. This plan is due by and no later than Monday 7 November at Noon and you will submit following
the same rules as the summative (two printed copies and electronically). You will select an organization,
and the person to address the memo to, and introduce the problem and the intervention you chose, with
a brief outline of proposed literature to justify the intervention. After you submit the plan you will keep
working on this idea and present it in the last two classes of the course. You will have feedback to help
you improve your final essay before school closure.
To practice with the full format of the summative essay, we will assign a class assignment which has
exactly the same format as the final essay to ensure you can manage the load, you will work on it and
present this as a group on November 9, in week 7 (after reading week, and after you have submitted your
plan) with Barbara. As a group you will receive feedback in the class itself.

'Deadlines and Procrastination'

Our advice to avoid procrastination is to practice the research by two fabulous behavioural scholars, Dan
Ariely and Klaus Wertenbroch ( Ariely, Daniel and Klaus Wertenbroch (2002): Procrastination, Deadlines,
and Performance: Using. Precommitment to Regulate One's Behavior.) This is your reading for week 6
Your deadlines, in sum:
Every Wednesday: Class assignments, mostly in teams
Monday 7 November at Noon (beginning of week 7): Individual Essay Plan (formative, 500 words)
Wednesday 9 November (week 7): Group FSA presentation (with Barbara)
Tuesday 6 December (week 11) at 11: Individual Lab Reports (Summative, 500 words, 10%)
Wednesday 30 November and 7 December (weeks 10 and 11): Individual presentations of essay ideas
Monday 20 February, at 11am (beginning of week 7 LT): Individual summative essay is due (Summative,
90%).

Are you also taking MG456? Your first formative for MG456 will also be on week 7 Lent Term same
week your MG455 summative is due so, plan wisely your time. Other courses will have deadlines too,
so just make sure you do your work each week, take advantage of reading week, and the summative
during the break. You can submit any time, before week 7 LT!

Reading list, list of lecture topics and class assignments, by week

(This is our plan as of 27th September 2016 things might change slightly so check Moodle for the
latest!)
Each class covers material taught in the previous weeks lecture. Readings are to be done after the
lecture and before its corresponding class. Weeks are numbered consecutively from beginning to end of
term. E.g., W2 class means the class in week 2 will cover material taught in the lecture in week 1.
W1 Lecture: Thursday 28 September: Welcome & Introductions
Introduction to Behavioural Decision Science and early models, Expected Utility Theory. System 1 and System 2. How we run this
course, how it could help you in the future. Preview of applications and questions you can answer. Short history. Q&A.

Pre-Class reading:
Hastie and Dawes (2001) Chapter 1
Edwards, W. & Fasolo, B. (2001) Decision technology. Annual Review of Psychology, 52, 581-606. (read for this week until the
discussion of Websites)

OPTIONAL FOR THE CURIOUS who want to know how Behavioural Decision Science started: Edwards, W. (1954). The theory of
decision making. Psychological Bulletin, 51, 380-417

W2 Class: Wednesday 5 October (with Valentina)

In this class you will get to know your team mates and you will go over the syllabus in detail. You will introduce yourself and share
answers to the following questions:
1.

The most recent important decision I have made is?

2.

The way I made this decision was

3.

What is the difference between output and process in the study of decision-making based on Hastie and Dawes?

W2 Lecture: Thursday 6 October: Defining and Evaluating Decisions

Decision quality and decision. What is a good decision?

Pre-Class reading:
Baron, J., & Hershey, J. C. (1988). Outcome bias in decision evaluation. Journal of personality and social psychology, 54(4), 569.
Yates J.F. (2993) Decision management: how to assure better decisions in your company. Chapter 2
OPTIONAL FOR THE CURIOUS: This paper has generated a lot of attention in the press and Media.Dijksterhuis, A., Bos, M. W.,
Nordgren, L. F., & van Baaren, R. B. (2006). On making the right choice: The deliberation-without-attention effect. Science, 311,
1005-1007.

W3 Class Wednesday 12 October (with Barbara and Valentina)

Different teams will present their written answers to these questions:
1.

A most recent important decision I have made is? (same or different from last week)

2.

I think this decision was (good/bad) because (explain)

3.

(this is possible to answer if youve been curious and read Dijksterhuis et al): Is it possible to choose unconsciously?
When is unconscious thought better than conscious?

W3 Lecture: Thursday 13 October- Framing and Deciding with Conflicting Objectives (part 1)
Brief history of utility. Preference Construction. (Mis)predicting future utility. Preference reversal and Prospect Theory. How
preferences are constructed by the context, reference point, question asked, frame imposed, and problem structure. Applications
to many domains, including public policy and marketing.

Pre-class reading:
Read & Airoldi (2005) "Utility Theory" in BS Everitt and DC Howell (Eds) Encyclopedia of Statistics in Behavioral Science, John Wiley
& Sons Ltd, Chichester, vol. 4: 2098-2101
Baron J. (2008) Thinking and deciding - Descriptive Theories of Choice Under Uncertainty
OPTIONAL FOR THE AMBITIOUS: Kahneman, D. & Tversky, A. (1979). Prospect theory: An analysis of decision under risk.
Econometrica, 47, 263-291. [This article is the most cited article ever in this leading economics journal.]

W4 Class Wednesday 19 October (with Valentina)

Different teams will present their written answers to these questions:
1.

What are the differences and similarities between expected utility theory and prospect theory?

2.

Present a decision made by someone else (which you read about in the news could be policy, management [CEO of
an important company] or personal). Which of the two theories do you think better describes how this decision was
made, and also would help you improve this decision?

W4 Lecture: Thursday 20 October: Deciding with Conflicting Objectives (part 2)

Repertoire of choice strategiesfrom those with little thinking to those which require systematic analysis. Accuracy vs. effort
framework: When to use which approach? Decision making style. Application of choice strategies to consumer decisions,
particularly online. Time Preferences

Pre-class reading:
Schoemaker, PJH, & Russo, JE, (1993) A pyramid of decision approaches. California Management Review, 36(1): 9-31.
Ranyard R (2005) Decision Making Strategies. in BS Everitt and DC Howell (Eds) Encyclopedia of Statistics in Behavioral Science,
John Wiley & Sons Ltd, Chichester, vol. 1: 466-471
Edwards, W. & Fasolo, B. (2001) Decision technology. Annual Review of Psychology, 52, 581-606. (last part, discussion of
Websites)
OPTIONAL FOR THE AMBITIOUS
1.

Tversky, A. (1972). Elimination by aspects: A theory of choice. Psychological Review, 79, 281-299.

2.

Payne, J.W., Bettman, J.R., & Johnson, E.J. (1988). Adaptive strategy selection in decision making. Journal of
Experimental Psychology: Learning, Memory and Cognition, 14, 534-552.

W5 Class Wednesday 26 October (with Valentina)

Different teams will present their own written answers to these questions:
1.
2.
3.

Report on an important decision (with trade-offs) that one of you is making. Is a compensatory or noncompensatory process used to choose? Which strategy exacty? How can you tell? Is the decision rational?
Compensatory is often viewed as the rational way to deal with problems involving conflicting objectives.
Do you agree? If not, why not?
Why would people use noncompensatory decision strategies even if the strategies are not fully rational?

W5 Lecture: Thursday 27 October: Deciding with risk and uncertainty (part 1)

Risk and role of emotions Class Feedback Survey

Pre-class reading:
Newell B.R., Lagnado D.A., Shanks D.R. (2007) Straight choices: the psychology of decision making - Chapter 13 Emotional
influences on decision making
Slovic, P. (1987). Perception of Risk. Science 236(17 April): 280-285.
Beyer, A. R., Fasolo, B., Phillips, Lawrence D., de Graeff, P. A. and Hillege, H. L. (2013) Risk perception of prescription drugs:
results of a survey among experts in the European regulatory network. Medical Decision Making, 33 (4). pp. 579-592.

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Slovic, P., M.L. Finucane, E. Peters, and D.G. MacGregor. 2007. The affect heuristic. European Journal of Operational
Research 177, no.3: 1333-1352

W6: READING WEEK

Do week 5 readings, catch up, read The sense of style, and Ariely & Wertenbroch's article on Procrastination, Deadlines and
Performance.
Prepare for your FSA team presentation for the class in week 7 (with Barbara)

Finalise your Individual Essay Plan and submit it by Monday 7 November at noon
Ariely, Daniel and Klaus Wertenbroch (2002): Procrastination, Deadlines, and Performance: Using. Precommitment
to Regulate One's Behavior. Psychol Sci. ;13(3):219-24.

W7 Class Wednesday 9 November (with Barbara) FSA Group Presentations

Different teams prepare a presentation for the Head of the Food Standards Agency (FSA, an independent UK Government
department set up in 2000 to protect the public's health and consumer interests in relation to food), giving a behavioural insight
on how to inform the public about the risks and benefits posed by genetically modified foods. What advice would you give the
FSA on how best to communicate the risks and benefits of GM foods? Be rigorous and scholarly.
OPTIONAL PRACTICE for the keen (not assessed): After your group presentation, you write up your own individual report, 1000
words for part 1 and 2000 words for part 2.
In the first part of your answer (no more than 1,000 words), you write a memorandum to the Head of the Food Standards Agency
(FSA, an independent UK Government department set up in 2000 to protect the public's health and consumer interests in relation
to food), giving a behavioural insight on how to inform the public about the risks and benefits posed by genetically modified
foods. What advice would you give the FSA on how best to communicate the risks and benefits of GM foods?
In the second part of your answer (no more than 2,000 words), you will justify the specific recommendations presented in the
memorandum with reference to behavioural and decision science literature and theories covered in the course (e.g. What
literature suggests the general public will perceive GM foods in the way you recommend, and why?

W7 Lecture: Thursday 10 November: Deciding with Risk and Uncertainty (part 2)

Updating beliefs with new information, probabilistic thinking

Pre-class reading:
Gigerenzer, G., Gaissmaier, W., Kurz-Milcke, E., Schwartz, L. M., & Woloshin, S. (2007). Helping doctors and patients make
sense of health statistics. Psychological science in the public interest, 8(2), 53-96.
Plous S. (1993). The psychology of judgment and decision making - Chapter 12 Probability and Risk

NO CLASS ON WEDNESDAY 16 November INDEPENDENT WORK WITH YOUR TEAM TO PREPARE FOR
BRL TOUR, W9 CLASS, AND LAB REPORT
Please prepare for the BRL Experience by checking the BRL website (http://lse.ac.uk/brl) for terms and conditions and rules of
participation. Information about the BRL experience will be given in Week 7.
To prepare for the MG455 Lab report, read a paper that describes research conducted in a lab as opposed to in the field. You can
choose a lab experiment on individual or group decision making.

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Find out and the bring to W9 class (Wed 23) examples of how uncertain events and probabilistic information are communicated
in the news, media, or online. Are probabilities or frequencies given? Which are easier to understand, and why? Give an
example in a domain of your choice (e.g. financial, health/medical, or consumer).

W8: Thursday 17 November: Behavioural Research Lab (BRL) Experience

W9 Class: Wednesday 23 November (with Valentina)

You bring a draft of your lab report, and then ONE randomly will be asked to present it - a collective feedback session benefitting
all will follow. Different teams will present their own written answers to these questions:
Find out and bring to class examples of how uncertain events and probabilistic information are communicated in the news,
media, or online. Are probabilities or frequencies given? Which are easier to understand, and why? Give an example in a
domain of your choice (e.g. financial, health/medical, or consumer).

W9 Lecture Thursday 24 November: GUEST LECTURE by Richard S. John

Application of Behavioural Decision Science to Homeland Security and Law

Pre-lecture reading:
Siebert, J., von Winterfeldt, D., & John, R.S. (2016). Identifying and structuring the objectives of the Islamic State of Iraq and the
Levant (ISIL) and its followers. Decision Analysis, 13(1), 26-50. doi: 10.1287/deca.2015.0324
Scurich, N., Nguyen, K., & John, R.S. (2016). Quantifying the presumption of innocence. Law, Probability, and Risk, 15(1), 71-86.
doi: 10.1093/lpr/mgv016

Optional for the keen:

Scurich, N. & John, R.S. (2012). Prescriptive approaches to communicating the risk of violence in actuarial risk assessment.
Psychology, Public Policy, and Law, 18(1), 50-78. doi:10.1037/a0024592
Rosoff, H., John, R.S., Burns, W., & Siko, R. (2012). Structuring uncertainty and conflicting objectives for life or death decisions
following an urban biological catastrophe. Journal of Integrated Disaster Risk Management, 2(1), 1-21. doi:
10.5595/idrim.2012.0035

W10 Class: Wednesday 3O November (with Barbara) Individual essay presentations

In this class you will present your ideas for the final essay.
Prepare your presentation (can be just oral or with slides, no more than 3, plus as many references as you want to scholarly
papers. You have a strictly enforced limit of 3-5 minutes) .

W10 Lecture Thursday 1 December: Deciding with Risk and Uncertainty (part 3)
Heuristics we use and traps we fall into in the presence of uncertainty. Overconfidence and other biases. 1/N heuristic for capital
allocation. Applications to financial, legal and medical domains. Representativeness heuristic, planning fallacy and intertemporal
discounting

Pre-class reading:
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Tversky, A. & Kahneman, D. (1974). Judgment under uncertainty: Heuristics and biases. Science, 185, 3-20. This may be the
most influential article on subjective probability judgments ever written.
Hershfield, H.E. (2011). Future self-continuity: How conceptions of the future self transform intertemporal choice. Annals of
the New York Academy of Sciences, 1235(2011), 30-43.
Kahneman (2011), particularly chapter 9

Gentle reminder: Submit lab report by 6th December!

W11 Class: Wednesday 7 December (with Barbara): Individual essay presentations

In this class you will present your ideas for the final essay.
Prepare your presentation (can be just oral or with slides, no more than 3, plus as many references as you want to scholarly
papers. You have a strictly enforced limit of 3-5 minutes).In your presentation please answer to the following questions
1.

With probability judgments, how you ask the question matters a lot. Try to think of examples of different questions
applied to the problem in your essay (e.g. financial, health, social, policy...).

2.

Bring at least an example of a bias or heuristic which is most likely to influence a task or choice in your prohlem

3.

What is the difference between a heuristic and a bias?

W11 Lecture: Thursday 8 December: Debiasing in Groups or Alone

Different categories of debiasing. Are groups a way to de-bias individuals? how do groups decide, and how can we help groups
choose better? Risk assessment by groups, group polarisation. When many heads are better than one. Final Wrap Up,, course
evaluation

Pre-class reading:
Bazerman, M., & Moore, D.A. (2012). Judgment in managerial decision making. John Wiley & Sons; 8th Edition, Chapter
12: Improving Decision Making
Soll, J. B., Milkman, K. L., & Payne, J. W. (2015, In press). A users guide to debiasing. In Wiley Blackwell Handbook of Judgment
and Decision Making, G. Keren and G. Wu (Eds.).
Sunstein, C. R. and R. Hastie. 2014. Making dumb groups smarter. The new science of group decision making. Harvard Business
Review (December): 90-98

W11 Revision - Friday 9 December: Conclusions and Future Challenges

Final Wrap Up, connection to MG456, future research, your questions, course evaluation

Recommended reading, and important for students taking MG456

Morton, A., & Fasolo, B. (2009) Behavioural decision theory for multi-criteria decision analysis: a guided tour. Journal of the
Operational Research Society, 60, 268-275.

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FINAL DEADLINE
Monday 20 February, at 11am (beginning of week 7 LT):
(Summative, 90%).

Individual summative essay is due

Books
There is no single textbook for this course. I strongly encourage students to borrow or buy a copy of:
Hastie, R., & Dawes, R.M. (2001). Rational Choice in an Uncertain World. Sage
Publications, Thousand Oaks. LSE Library Course collection books BF448 D26
The library has the 2001 edition which I use to give references here. But the latest
edition is 2010, which is just expanded.
Kahneman, D. (2011). Thinking, Fast and Slow. (Danny Kahneman won the Nobel Prize in
2002 for his work on the psychology of decision making with Amos Tversky. It is available
as an e-book.)
Bazerman, M. and Moore, D A (2013). Judgment in Managerial Decision Making. New
York: Wiley. 8th edition (There are many editions of this book this is the very latest.)

A list of textbooks, focusing on different aspects or implications of this course, appears here.
You can choose whichever you like most - browse them at the library.

For Style and Essay Writing

Pinker, S. (2015). The Sense of Style: The Thinking Person's Guide to Writing in the 21st Century

With a focus on psychological theories of decision making

Popular Books
Ariely, D. (2008). Predictably Irrational: The Hidden Forces That Shape Our Decisions. Harper Collins. LSE
Library Course collection books BF448 A69
Gigerenzer, G. (2014). Risk savvy: How to make good decisions. Penguin.
Kahneman, D. (2011). Thinking, Fast and Slow. London: Allen Lane. LSE Library Course collection books
BF441 K11
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Research and Text Books

Baron, J. (1994). Thinking and Deciding. Cambridge: Cambridge University Press. LSE Library Course
collection books BF441 B26
Hastie, R., & Dawes, R.M. (2001). Rational Choice in an Uncertain World. Sage Publications, Thousand
Oaks. LSE Library Course collection books BF448 D26
Lichtenstein, S., & Slovic, P. (2006). The Construction of Preference. (S. Lichtenstein & P.Slovic, Eds.).
Cambridge University Press. LSE Library Main collection books BF611 C75
Payne, J. W., Bettman, J. R., & Johnson, E. J. (1993). The adaptive decision maker. Cambridge University
Press. LSE Library Course collection books BF448 P34.
Plous, S. (1993). The Psychology of Judgment and Decision Making. New York: McGraw-Hill. LSE Library
Course collection books BF448 P73
Yates, F. J. (2003). Decision Management: How to Assure Better Decisions in Your Company. Jossey-Bass.
LSE Library Course collection books HD30.23 Y31

With a focus on behavioural public policy

Dolan, P (2014). Happiness by Design: Finding pleasure and purpose in everyday life.
Halpern, D (2015). Inside the Nudge Unit: How small changes can make a big difference.
Oliver, A. (Ed.) (2013). Behavioural public policy. Cambridge University Press. LSE Library Course collection
books BF199 B41
Thaler, R. H., & Sunstein, C. R. (2008). Nudge: Improving decisions about health, wealth, and happiness.
Yale University Press. LSE Library Course collection books HB74.P8 T36
Web resources
There are a number of different communities in the world with an interest in behavioural decision science.
If you are interested in exploring the world of behavioural decision science on the web, the following links
may be good places to start.
1.

@LSEBehavioural (this is us!)

2.

Behavioural Science and Policy Association https://behavioralpolicy.org/

3.

European Association for Decision Making http://www.eadm.eu/

4.

London Judgement and Decision Group http://www.psychol.ucl.ac.uk/ljdm/

5.

Society for Judgment and Decision Making http://www.sjdm.org/

6.

Society for Medical Decision Making http://www.smdm.org/

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