Students will examine the evolution of economic thought from the classical school (including major figures and their theories) to the behavioral school of economics. Students will examine the major differences between the classicals and neo-classicals (hint: you should focus some attention on how prices of goods are determined), discuss some of the major elements of neo-classical economic theory and then evaluate the rise of behavioral economics as a counterpoint to the neo-classical assumptions of rational, self-interested economic actors with full information to maximize utility. For this research project you will examine the behavioral school of economics and discuss several flaws that they have found in the neo-classical framework. At a minimum, you should present to the reader the following:
An overview of the evolution of neo-classical theory from the classical school of thought
An identification of several main assumptions that are made by the neo-classicals
A discussion of the evolution of behavorial economics including key proponents
An analysis of several topics that have been examined and the implications for the market
The endowment effect
The anchoring effect
Irrational exuberance
Prospect theory
A discussion of the role of advertising under each general framework
