Neuroeconomics

Abstract

Neuroeconomics is an emergent multidisciplinary field that strives to understand how and why humans make decisions. It brings together behavioural methods and sophisticated computational theories from microeconomics, an understanding of emotional influences on behaviour from psychology, and human functional neural imaging and electrophysiological recordings in animal models from neuroscience. Moreover, the neuroscientific contribution to this field is now beginning to incorporate molecular, pharmacological and physical interference techniques which can test the causal relationship between neural function and behaviour. Research in neuroeconomics has uncovered potential representations of value and costs within the brain. Studies of decision‐making in social environments have also revealed key emotional components of decision‐making that may help to explain some deviations from optimal or rational decision‐making in humans. Although it still has many challenges to overcome, neuroeconomics stands poised to benefit both microeconomic theory and neuroscience through shared techniques and ideas.

Key concepts

  • Psychology, neuroscience and economics existed as parallel fields, with the goal of understanding decision‐making behaviour.

  • Neuroeconomics is an emergent field that uses brain‐imaging techniques and animal models from cognitive neuroscience and computational models and behavioural experiments from economics.

  • A major goal of neuroeconomics is to determine how value is represented within the brain and how this representation is used towards decision‐making.

  • Animal studies involving primary rewards, such as food and water have given the first clues as to the representation of value within the brain, and human studies of primary and monetary rewards have made similar findings.

  • A second goal of neuroeconomics is to determine how costs, such as monetary payments, effort and delays in reward, are represented within the brain.

  • A subfield of neuroeconomics is devoted to the study of social decision‐making and incorporates concepts from game theory.

  • There may be multiple neural systems that dictate rational versus emotion‐based decisions, but more evidence is needed.

  • Neuroeconomics can be applied to the study of psychiatric disorders and addiction, in which the brain's mechanisms for representing value are disrupted.

Keywords: decision‐making; reward; fMRI; cognition; learning

Further Reading

Glimcher PW (2003) Decisions, Uncertainty, and the Brain: The Science of Neuroeconomics. Cambridge, MA: MIT Press.

Knutson B and Bossaerts P (2007) Neural antecedents of financial decisions. Journal of Neuroscience 27: 8174–8177.

Lee D (2008) Game theory and neural basis of social decision making. Nature Neuroscience 11: 404–408.

Loewenstein G, Rick S and Cohen JD (2008) Neuroeconomics. Annual Reviews of Psychology 59: 647–672.

McClure SM, Laibson DI, Loewenstein G and Cohen JD (2004) Separate neural systems value immediate and delayed monetary rewards. Science 306: 503–507.

Padoa‐Schioppa C (2007) Orbitofrontal cortex and the computation of economic value. Annals of the New York Academy of Sciences 1121: 232–253.

Phillips PEM, Walton ME and Jhou TC (2007) Calculating utility: preclinical evidence for cost‐benefit analysis by mesolimbic dopamine. Psychopharmacology (Berl) 191: 483–495.

Platt ML and Huettal SA (2008) Risky business: the neuroeconomics of decision making under uncertainty. Nature Neuroscience 11: 398–403.

Rangel A, Camerer C and Montague PR (2008) A framework for studying the neurobiology of value‐based decision making. Nature Reviews Neuroscience 9: 545–556.

Sugrue LP, Corrado GS and Newsome WT (2005) Choosing the greater of two goods: neural currencies for valuation and decision making. Nature Reviews Neuroscience 6: 363–375.

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Hart, Andrew S, Walton, Mark E, and Phillips, Paul EM(Mar 2009) Neuroeconomics. In: eLS. John Wiley & Sons Ltd, Chichester. http://www.els.net [doi: 10.1002/9780470015902.a0021399]