Neuroeconomics

What have we found, and what should we search for

By ： XU Meiling Zhejiang University

Aldo Rustichini . Current Opinion in Neurobiology 2009, 19:672–677

Neuroeconomics

The application of conceptual structure and experimental techniques widely used in neuroscience to the study of economic behavior.

An interdisciplinary field, crossing boundaries between Economics, Psychology, and Neuroscience

Its original program was to provide a test for a large number of competitive theories of decision making

This presentation: focus on the study of economic decision that a single agent takes in isolation

Assumption of Classical Decision Making Theory

Two-dimensional man Two parameters

• Attitude to risk

• Attitude to intertemporal

tradeoff

One parameter in general

• Utility Function

Theory development and Empirical Evidence

Prospect Theory

Abandoning integration assumption

Three distinct assumptions

A reference point

Loss aversion

Risk sensitivity

Ellsberg Paradox

Time inconsistency in planning

Changing planning when evaluating options because of

discounting rate change

Systematic study of regret (Bell, Loomes & Sugden)

What we have learn

Existence of a common currency

fMRI & Single neuron recording in monkeys

Goods-based value encoding instead of action-based

Menu invariant---Firing rate independent of other options

In sensory perception, neural activity codes a subjective response instead of objective properties

Coding of economic value depends on the general context of a choice

Tobler et al: Adaptive coding of dopamine neurons at the time of delivery of reward

Controversial topics

Five-dimensional man

Personality traits are very powerful in predicting economic outcomes

Fu

ture:

Th

eory

and

exp

erim

en

tal testin

g