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Neuroeconomics: Why Economics Needs Brains
Author(s) -
Camerer Colin F.,
Loewenstein George,
Prelec Drazen
Publication year - 2004
Publication title -
the scandinavian journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.725
H-Index - 64
eISSN - 1467-9442
pISSN - 0347-0520
DOI - 10.1111/j.0347-0520.2004.00377.x
Subject(s) - neuroeconomics , brain function , neuroscience , black box , preference , organizational economics , economics , function (biology) , behavioral economics , cognitive science , psychology , microeconomics , computer science , biology , artificial intelligence , evolutionary biology
Neuroeconomics uses knowledge about brain mechanisms to inform economic theory. It opens up the “black box” of the brain, much as organizational economics opened up the theory of the firm. Neuroscientists use many tools—including brain imaging, behavior of patients with brain damage, animal behavior and recording single neuron activity. The key insight for economics is that the brain is composed of multiple systems which interact. Controlled systems (“executive function”) interrupt automatic ones. Brain evidence complicates standard assumptions about basic preference, to include homeostasis and other kinds of state‐dependence, and shows emotional activation in ambiguous choice and strategic interaction.