Behavioural Economics Intro

Overview

This 45-minute lesson introduces Year 13 students to behavioural economics within the AQA A Level Economics specification. It covers what behavioural economics is, why it is important, and explores key cognitive and decision biases. The lesson aligns with the National Curriculum for England, enriches students’ understanding of economic decision-making beyond the rational agent model, and develops critical thinking skills essential for A Level Economics.

---

National Curriculum Alignment

• Subject: Economics (AQA A Level)

• Topic: Behavioural Economics introduction

• Programme of Study:

  • 3.3.3 Market Failure and Government Intervention (AQA) – understanding how real-world decisions deviate from classical rationality.
  • 4.1.2 Behavioural and Psychological Economics (AQA) – understanding key behavioural biases affecting decision making.

• Learning objectives linked to curriculum content:

  • Analyse how cognitive biases influence economic decision-making (AQA Paper 1, Sections on Behavioural Economics).
  • Evaluate limitations of the rational economic agent model, integrating behavioural insights.
  • Apply real-world examples to understand and critique economic choices and market outcomes.

---

Learning Objectives

By the end of this lesson, students will be able to:

1. Define behavioural economics and explain its key purpose in the context of economic theory (AQA A Level Economics).
2. Identify and describe at least four cognitive and decision biases that affect individual choices.
3. Analyse examples of these biases affecting economic behaviour in real life.
4. Reflect critically on the implications of behavioural economics for market efficiency and government policy.

---

Resources Required

• Whiteboard and markers
• Projector/slides with definitions, diagrams, and examples
• Printed worksheet with bias descriptions and real-world examples for group work
• Sticky notes and pens for interactive polling activity
• Timer

---

Lesson Structure (45 mins)

1. Starter Activity - "Economist or Behaviouralist?" (5 minutes)

• Purpose: Activate prior knowledge about traditional economic rational-agent theory versus behavioural economics.
• Activity:
  • On the board/projector, display pairs of statements, e.g.:
    • “Humans always maximise utility.”
    • “People often make choices influenced by emotions.”
  • Students vote by standing on one side of the room (rational vs behavioural statement).
  • Quick debrief: explain how behavioural economics challenges rational-agent assumptions.

---

2. Teacher Input & Explanation (10 minutes)

• What is behavioural economics?
  • Explain as a branch of economics that incorporates psychological insights into economic decision-making.
  • Emphasise departure from the rational agent model (perfect information, consistent utility maximisation).
• Key terms: Cognitive biases, decision biases, heuristics.
• Use clear, concise definitions with visual slides.

---

3. Cognitive and Decision Biases - Introduction (10 minutes)

• Introduce and define 4 key biases with student-friendly examples:
  1. Anchoring Bias – Relying too heavily on the first piece of information.
  2. Confirmation Bias – Seeking information confirming existing views.
  3. Loss Aversion – Fear of losses outweighs pleasure of equivalent gains.
  4. Herd Behaviour – Following others’ actions without independent evaluation.
• Discuss examples related to economic decisions such as purchasing, investing, or voting behaviour.

---

4. Group Activity – Bias Identification & Application (12 minutes)

• Setup: 6 groups of 4 students; hand out worksheets with short case studies/scenarios depicting economic decisions influenced by biases.
• Task:
  • Identify which bias is at work in each scenario.
  • Discuss how the bias could lead to market inefficiency or suboptimal economic outcomes.
• Assessment: Groups share one example and explain their reasoning aloud.

---

5. Plenary and Assessment (8 minutes)

• Use sticky notes for a quick self-assessment:
  • Write one new thing learned about behavioural economics.
  • Write one question remaining or something they find intriguing.
• Collect and quickly scan to inform next lesson.
• Brief open class discussion addressing a few interesting points or questions.

---

Differentiation and Inclusion

• Mixed ability grouping during the group task ensures peer support.
• Visual aids and definitions scaffold comprehension of technical vocabulary.
• Starter activity engages kinaesthetic learners.
• Oral and written formats accommodate different learning styles.

---

Homework / Extension

• Research and bring one real-world example of behavioural economics influencing a recent economic policy or business decision. Prepare to share in next lesson.

---

Teacher Reflection Points

• Did students engage with the shift from traditional to behavioural economic thinking?
• How effectively did the group activity prompt application of key biases?
• Were definitions clear, and did students feel confident identifying biases?
• What gaps appeared in understanding for targeted review?

---

This lesson plan blends curriculum rigour with interactive techniques designed to inspire Year 13 students to appreciate behavioural economics as a vital lens for analysing real-world economic choices.