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The Dawn of Neuroeconomics

November 27, 2011, 10:00 AM

What's the Latest Development?

Researchers from the field of neuroscience are introducing new concepts into the study of economics, turning the once-rational discipline on its head. One of the most recent texts to surprise economists is Paul Glimcher's Foundations of Neuroeconomic Analysis. "Glimcher is skeptical of prevailing economic theory, and is seeking a physical basis for it in the brain. He wants to transform 'soft' utility theory into 'hard' utility theory by discovering the brain mechanisms that underlie it."

What's the Big Idea?

The idea of individuals as rational consumers looking to maximize the utility of their purchases dominated economics for decades. But that assumption fails to deal with ambiguous situations where variables remain unknown. "It has already been discovered that the brain regions used to deal with problems when probabilities are clear are different from those used when probabilities are unknown." John Maynard Keynes recognized early that our 'animal spirits' dictate some of our decisions.

Photo credit: shutterstock.com


The Dawn of Neuroeconomics

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