Information processing and decision-making: Evidence from the brain sciences and implications for economics
AbstractThis article assesses the potential benefits of including findings from neurobiology in economic decision-making models. First, we emphasize that the evidence supports both ‘expected utility-like’ theory and ‘Bayesian-like’ information acquisition theory. Second, we explain that inferences and representations are subject to physiological limitations that affect decision making. We report in particular two ‘mechanical’ models developed in neuroscience to represent neural data and choices. We then propose two economic models that incorporate physiological limitations into an expected utility framework. Interestingly, these two models provide foundations for those developed in neuroscience (which emerge endogenously in our framework) and provide further predictions that can be tested in principle. This allows us to discuss the benefits of bringing together evidence from neuroscience and economic modeling.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Economic Behavior & Organization.
Volume (Year): 83 (2012)
Issue (Month): 3 ()
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Web page: http://www.elsevier.com/locate/jebo
Neurobiology; Decision-making; Economic modeling;
Find related papers by JEL classification:
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
- D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information
- D87 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Neuroeconomics
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Glimcher, Paul W. & Dorris, Michael C. & Bayer, Hannah M., 2005. "Physiological utility theory and the neuroeconomics of choice," Games and Economic Behavior, Elsevier, vol. 52(2), pages 213-256, August.
- Ennio Bilancini & Leonardo Boncinelli, 2014.
"Persuasion with Reference Cues and Elaboration Costs,"
Working Papers - Economics
wp2014_04.rdf, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.
- Ennio Bilancini & Leonardo Boncinelli, 2014. "Persuasion with Reference Cues and Elaboration Costs," Center for Economic Research (RECent) 102, University of Modena and Reggio E., Dept. of Economics.
- Zakaria Babutsidze, 2012. "If you love it I'll probably hate it : local interaction among consumers of information goods," Documents de Travail de l'OFCE 2012-24, Observatoire Francais des Conjonctures Economiques (OFCE).
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