NEUROECONOMICS AND DECISION MAKING PROCESS
Abstract
Neuroeconomics unified the once disparate fields of economics and psychology. The central thesis of the paper is that the development of behavioral economics in important respects parallels the development of cognitive science – Neuroeconomics has inspired more change within economics than within psychology because the most important findings in Neuroeconomics have posed more of a challenge to the standard economic perspective. The single most important source of inspiration for behavioral economists has been behavioral decision research, which can, in turn, be seen as an integration of ideas from cognitive science and economics. Neuroeconomics has primarily challenged the standard economic assumption that decision making is a unitary process – a simple matter of integrated and coherent utility maximization – suggesting instead that it is driven by the interaction between automatic and controlled processes. This paper reviews neuroeconomic research in areas of interest to both economists and psychologists: decision making under risk and uncertainty, intertemporal choice, and social decision making.
References
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[2] Asch, S.E. 1951. Effects of group pressure upon the modification and distortion of judgments, in: Guetzkow H.S., ed. Group, Leadership and Men Research in Human Relations. Pittsburgh: Carnegie Press, 177―190.
[3] Asch, S.E. 1952. Social Psychology, New York: Prentice-Hall.
[4] Bechara, A. et al. 1007. Deciding advantageously before knowing the advantageous strategy. Science, 275: 1293―1295.
[5] Benhabib, J., Bisin, A. 2002. Self-control and consumption-savings decisions: Cognitive perspectives, Working Paper, New York University.
[6] Bernheim, B.D., Rangel, A. 2004. Addiction and cue-triggered decision processes. American Economic Review, 94(5), 1558 – 1590.
[7] Bică, Gheorghe, Constantinescu, Madalina, 2007. Behavioral Finances and Their Influences on Financial Markets. Arhivele Olteniei, no. 21: 341 – 348.
[8] Camerer, C., Lowenstein, G. 2003. Behavioral economics: Past, present, future, In Colin Camerer, George Loewenstein and Matthew Rabin (eds.) Advances in Behavioral Economics, New York and Princeton: Russell Sage Foundation Press and Princeton University Press.
[9] Camerer, C., Lowenstein, G., Prelec, D. 2005. Neuroeconomics: How neuroscience can inform economics. Journal of Economic Literature, 43, 9 – 64.
[10] Camerer, Colin F. 2003. Behavioral game theory: Experiments on strategic interaction, Princeton; Princeton University Press.
[11] Camille, N. et al. 2004. The involvement of the orbitofrontal cortex in the experienced of regret, in: Science, 304: 1167―1170.
[12] de Martino, B. et al. 2006. Frames, biases, and rational decision-making in the human brain. Science, 313: 684―687.
[13] Fischhoff, B. 1988. Judgment and decision making, in: Robert J, Sternberg, and Edward E. Smith (eds.), The psychology of human thought, New York: Cambridge University Press, pp. 153 – 187.
[14] Frederick, S., Loewenstein, G., O‘Donoghue, T. 2002. Time discounting and time preference: A critical review. Journal of Economic Literature, 40: 351―401.
[15] Fudenberg, D., Levine D.K. 2004. A dual self model of impulse control, Working Paper, Harverd University, Department of Economics.
[16] Fukui, H., Murai T., Shinozaki J., et al. 2006. The neural basis of social tactics: An fMRI study, Neuroimage, 32: 913―920.
[17] Greene, J.D., Nystrom, L.E., Engell, A.D. et al. 2004. The neural bases of cognitive conflict and control in moral judgment. Neuron, 44: 389―400.
[18] Greene, J.D., Sommerville, R.B., Nystrom, L.E. et al. 2001. An fMRI investigation of emotional engagement in moral judgment. Science, 293: 2105―2108.
[19] Henrich, J., Boyd, R., Bowles, S. et al. 2001. In search of homo economicus: Behavioral experiments in 15 small scale societies. American Economic Review, 91(2): 73―78.
[20] Hsu M. et al. 2005. Neural systems responding to degrees of uncertainty in human decision making. Science, 310(5754): 1680 – 1683.
[21] Jolls, C., Sunstein, C., Thaler R. 1998. A behavioral Approach to law and economics. Stanford Law Review, 50(5): 1471 – 1550.
[22] Kahneman, D., Frederick, S. 2007. Frames and brains: Elicitation and control of response tendencies. Trends in Cognition Science, 11: 45―46.
[23] Kahneman, D., Tversky, A. 1979. Prospect theory: An analysis of decision under risk. Econometrica, 47: 263―291;
[24] Kahneman, D. 2002. Maps of Bounded Rationality: a perspective on intuitive judgment and choice, Nobel Prize Lecture, December 8, also in: The American Economic Review, (2003), vol. 93, no. 5: 1449 – 1475(27).
[25] Knutson, B. et al. 2007. Neural predictions of purchases. Neuron, 53(1): 147 – 156.
[26] Kohlberg, L. 1969. Stage and sequence: The cognitive-developmental approach to socialization, in: Goslin D.A., ed. Handbook of Socialization Theory and Research, Chicago: Rand McNally, 347―480.
[27] LeDoux, J.E. 1996. The emotional brain: The mysterious underpinnings of emotional life, New York, NY: Simon and Schuster.
[28] Lo, A.W., Repin, D.V. 2002. The psychophysiology of real-time financial risk processing. Journal of Cognition Neuroscience, 14(3): 323―339.
[29] Loewenstein, G. et al. 2001. Risk as Feelings. Psychological Bulletin, 127(2): 267 – 286.
[30] Loewenstein, G., Lerner, J. 2003. The role of affect in decision making, in Richard J. Dawson, Klaus R. Scherer and H. Hill Goldsmith (eds.), Handbook of affective science, 691 – 642, Oxford, Oxford University Press.
[30] Loewenstein, G. 1996. Out of control: Visceral influences on behaviour. Organizational Behavior and Human Decision Process, 65(3): 272 – 292.
[31] McCaffery, E., Slemrod, J. 2006. Behavioral public finance: toward a new agenda, New York, Russell Sage Foundation Press.
[32] McClure, Sam M. et al. 2004. Separate neural systems value immediate and delayed monetary rewards. Science, 304: 503 – 507.
[33] Mellers, B.A., Schwartz, A., Ho, K., Ritov, I. 1997. Decision affect theory: Emotional reactions to the outcomes of risky options. Psychological Science, 8(6), 423 – 429.
[34] Menon, V., Levitin, D.J. 2005. The rewards of music listening: Response and physiological connectivity of the mesolimbic system. Neuroimage, 28: 175―184.
[35] Montague, P.R., Berns, G.S. 2002. Neural economics and the biological substrates of valuation. Neuron, 36: 265―84.
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[40] Rilling, J.K., Sanfey, A.G., Aronson, J.A. et al. 2004. The neural correlates of theory of mind within interpersonal interactions. Neuroimage, 22: 1694―1703.
[41] Rilling, J.K., Gutman, D., Zeh, T. et al. 2002. A neural basis for social cooperation. Neuron, 35(2): 395―405.
[42] Rottenstreich, Y., Hsee, C.K. 2001. Money, kisses, and electric shocks: On the affective psychology of risk. Psychological Science, 12(3): 185 – 190.
[43] Sanfey, A.G. et al. 2006. Neuroeconomics: Integrating the disparate approaches of neuroscience and economics. Trends in Cognitive Science, 10(3): 108 – 116.
[44] Shiv, B., Loewenstein, G., Bechara, A. et al. 2005. Investment behavior and the negative side of emotion. Psychological Sciences, 16: 435―439.
[45] Shleifer, A. 2000. Inefficient markets: An Introduction to behavioral finance, Oxford University Press.
[46] Simonson, I., Tversky, A. 1993. Reason-based choice. Cognition, 49: 11 – 36.
[47] Sunstein, C. 2000. Behavioral law and economics, Cambridge, UK, Cambridge University Press.
[48] Thaler, R.H., Shefrin, H.M. 1981. An economic theory of self-control. Journal of Political Economy, 89(2): 392 – 406.
[49] Thaler, R.H., Sunstein, C.R. 2003. Libertarian paternalism. American Economic Review, 93: 175 – 179.
[50] Tom S. et al. 2006. Losses loom larger than gains in the brain: Neural loss aversion predicts behavioral loss aversion, Working Paper. Uncertainty laboratory research group, University of California, Los Angeles.
[51] Tversky, A., Kahneman, D. 1981. The framing of decisions and the psychology of choice. Science, 211: 453―458.
[52] Ursu, S., Carter, C.S. 2005. Outcome representations, counterfactual comparisons and the human orbitofrontal cortex: Implications for neuroimaging studies of decision-making. Cognition and Brain Resources, 23: 51―60.
[53] von Neumann, J., Morgenstern, O. 1944. Theory of Games and Economic Behavior, Princeton: Princeton University Press.
[54] Wilson, T.D., Lindsey, S., and Schooler, T.Y. 2000. A model of dual attitudes. Psychological Review, 107: 101 – 126.
Published
2010-12-31
How to Cite
CONSTANTINESCU, Mădălina.
NEUROECONOMICS AND DECISION MAKING PROCESS.
Theoretical and Practical Research in Economic Fields, [S.l.], v. 1, n. 2, p. 209 - 217, dec. 2010.
ISSN 2068-7710.
Available at: <https://journals.aserspublishing.eu/tpref/article/view/7434>. Date accessed: 27 dec. 2024.
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