Faculty of Business and Economics

Monash University

Undergraduate - Unit

This unit entry is for students who completed this unit in 2013 only. For students planning to study the unit, please refer to the unit indexes in the the current edition of the Handbook. If you have any queries contact the managing faculty for your course or area of study.

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6 points, SCA Band 3, 0.125 EFTSL

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FacultyFaculty of Business and Economics
Organisational UnitDepartment of Economics
OfferedClayton Second semester 2013 (Day)
Coordinator(s)Associate Professor Elias Khalil


A basic pillar of economic theory is that behaviour is governed by the response to incentives (what psychologists term 'extrinsic motivation'). But 'intrinsic motivation' plays a great role. People conceive incentives differently depending on the context. The unit elaborates on the interface of incentives and psychological factors such as bounded rationality, self-deception, weakness of will, and regret, to understand the complexity of human motivation. The unit also focuses on how organisations harness human motivation in the face of asymmetry of information (which usually undermines cooperation) and bounded rationality.


The learning goals associated with this unit are to:

  1. investigate the interplay of psychological variables with economic incentives
  2. investigate the different meaning of rationality
  3. investigate how rationality, and its multi-level meaning, relate to the emotions
  4. investigate why the rational choice approach is useful even when people behave


  1. investigate how could self-deception and self-rationalisation be possible if people are basically rational.


Within semester assessment: 50%
Examination: 50%

Chief examiner(s)

Contact hours

3 hours per week