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Neuroeconomic Foundations of Economic Choice--Recent Advances

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  • Ernst Fehr
  • Antonio Rangel

Abstract

Neuroeconomics combines methods and theories from neuroscience psychology, economics, and computer science in an effort to produce detailed computational and neurobiological accounts of the decision-making process that can serve as a common foundation for understanding human behavior across the natural and social sciences. Because neuroeconomics is a young discipline, a sufficiently sound structural model of how the brain makes choices is not yet available. However, the contours of such a computational model are beginning to arise; and, given the rapid progress, there is reason to be hopeful that the field will eventually put together a satisfactory structural model. This paper has two goals: First, we provide an overview of what has been learned about how the brain makes choices in two types of situations: simple choices among small numbers of familiar stimuli (like choosing between an apple or an orange), and more complex choices involving tradeoffs between immediate and future consequences (like eating a healthy apple or a less-healthy chocolate cake). Second, we show that, even at this early stage, insights with important implications for economics have already been gained.

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File URL: http://www.aeaweb.org/articles.php?doi=10.1257/jep.25.4.3
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Bibliographic Info

Article provided by American Economic Association in its journal Journal of Economic Perspectives.

Volume (Year): 25 (2011)
Issue (Month): 4 (Fall)
Pages: 3-30

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Handle: RePEc:aea:jecper:v:25:y:2011:i:4:p:3-30

Note: DOI: 10.1257/jep.25.4.3
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  1. Benjamin Bushong & Lindsay M. King & Colin F. Camerer & Antonio Rangel, 2010. "Pavlovian Processes in Consumer Choice: The Physical Presence of a Good Increases Willingness-to-Pay," American Economic Review, American Economic Association, vol. 100(4), pages 1556-71, September.
  2. B. Douglas Bernheim & Antonio Rangel, 2009. "Beyond Revealed Preference: Choice-Theoretic Foundations for Behavioral Welfare Economics-super-," The Quarterly Journal of Economics, MIT Press, vol. 124(1), pages 51-104, February.
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Cited by:
  1. Batrancea Larissa-Margareta & Nichita Ramona-Anca, 2012. "A Neuroeconomic Approach Of Tax Behavior," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(1), pages 649-654, July.
  2. Kenneth Gillingham & Karen Palmer, 2014. "Bridging the Energy Efficiency Gap: Policy Insights from Economic Theory and Empirical Evidence," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 8(1), pages 18-38, January.
  3. V. I. Yukalov & D. Sornette, 2012. "Quantum decision making by social agents," Papers 1202.4918, arXiv.org.
  4. Perez-Truglia, Ricardo, 2012. "On the causes and consequences of hedonic adaptation," Journal of Economic Psychology, Elsevier, vol. 33(6), pages 1182-1192.
  5. Michael Woodford, 2014. "Stochastic Choice: An Optimizing Neuroeconomic Model," American Economic Review, American Economic Association, vol. 104(5), pages 495-500, May.
  6. Olivier Brette & Thomas Buhler & Nathalie Lazaric & Kevin Marechal, 2014. "Reconsidering the Nature and Effects of Habits in Urban Transportation Behaviour," GREDEG Working Papers 2014-10, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), University of Nice Sophia Antipolis.

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