Economic research using laboratory and field experiments has discovered seemingly robust behavioural deviations from the model of homo oeconomicus, the rational, egoistic decision maker assumed in “standard” economic theory. In this course, we explore critically the challenges these behavioural regularities pose for economic theory, and will study behavioural economic models of decision-making which aim to incorporate and predict real-world economic behaviour. Specifically we review prospect theory (and its key component loss aversion), and theories of reference-dependent preferences, as well as related topics such as endowment effects, the sunk cost/Concorde fallacy, action inertia, mental accounting, risk and time preferences, self-command/self-regulation, cognitive illusions such as over-confidence, and simple heuristics that make us smart.