Neuroscience & Neuroeconomics seeks to understand the neural mechanisms underlying economic decision-making. This interdisciplinary field combines insights from neuroscience, psychology, and economics to explore how people make decisions, particularly when they deviate from traditional economic models of rationality.
Key Concepts
- Understanding Decision-Making: Neuroeconomics studies how the brain processes decisions involving risk, uncertainty, and time preferences. It uses tools like functional magnetic resonance imaging (fMRI) to observe brain activity during economic decisions, revealing how different brain regions contribute to decision-making processes.
- Emotions and Decisions: Neuroscience has shown that emotions significantly influence decision-making. For example, studies using games like the Ultimatum Game demonstrate that emotional responses can lead people to reject unfair offers even at a personal cost, highlighting the role of brain areas associated with emotion and cognition.
- Rationality and Irrationality: Behavioral economics challenges the assumption of rational decision-making by showing that people often act in predictably irrational ways. Neuroeconomics builds on this by identifying the neural basis for such behaviors, providing a more comprehensive understanding of why people might prioritize short-term rewards over long-term benefits or react more strongly to potential losses than gains.
- Value-Based Decision-Making: Neuroeconomics examines how the brain assigns value to different choices and how these values influence decision-making. This involves studying how neurotransmitters and hormones affect preferences and impulsivity.