Neuroeconomics Flashcards
what is neuroeconomics
study of biological microfoundations of economic cognition (both defined on other)
what are biological microfoundations
neurochemical mechanisms, like brain systems, neurons, genes, heart rate, skin resistance and neurotransmitters
what is economic cognition
preferences
decision-making
behaviour
emotions
what was the theory of the firm until 1970s
reduced form model of how capital and labour are combined to produce output
talk about rational economics, behavioural economics and what is a black box model
economics developed based on paradigm of rationality, behavioural economics developed alternative models of economic behaviour, these models are black box models: working on an “As if” assumption
what are the three ways that the brain can be studied
Observing the brain: -indirect (psychophysiological measurements as skin conductance, heart rate) -brain imaging Studying humans with lesions -associated deficits provide information about function of lesioned brain area Stimulating the brain -magnetic -psychopharmacological interventions
what are pharmacological methods
placebo controlled administration of substances inform about the functioning of neurotransmitter or hormone systems
what is another way we can study the brain that isn’t pharmacological or by observing the brain
animal research, many brain areas in humans and animals have similar structures, for example we can “produce” addicted rats
what are the two different brain systems and briefly explained
Affective system: fast unconscious, myopic and effortless -> automatic system (system 1) Analytic system: slow, conscious, forward-looking, self-regulatory, effortful and exhaustible -> controlled and rational system (system 2)
how does the internal and external region of brain link to the systems of the brain
external region -> system 2 internal region -> system 1
what is the Camerer et al 2016 paper about risk
risk reliably encoded in internal part of brain (insula), risk felt as emotion. internal part of brain active in losses
what is prospect theory from Camerer et al 2016
outcomes are encoded relative to a reference point,
decision disutility from anticipated losses is assumed to weigh disproportionately more strongly than gains, captured by loss aversion parameter,
amygdala active associated with framing shifts and loss-aversion,
amygdala known to be associated with rapid “vigilant” processing of threat
another contradiction of neo-classical economic theory from Camerer et al. (2016) (neuro)
individuals are assumed to be self-interested in traditional neo-classical economic theory, subjects prefer mutual cooperation outcome over unilateral defection in prisoners’ dilemma game, even though unilateral defection leads to higher economic payoff
motivation behind Sanfrey et al. (2003)
ultimatum game where one player proposes a division and the other can accept or reject this.
neoclassical predicts the proposer will offer the smallest sum possible to responder and for responder to accept this offer, however behavioural research indicates that irrespective of the monetary sum,
modal offers are typically 50% of the total amount and low offers (20%) have about a 50% chance of being rejected
setting of paper on experiment from ultimatum game (neuro)
ultimatum game where two players split a sum of money, interested in neural and behavioural reactions to fair offers (50:50) and unfair offers, played some rounds against humans and some against computers
