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The Brain as a Hierarchical Organization

Author Info

Listed author(s):
  • Isabelle Brocas
  • Juan D. Carrillo

Abstract

Based on recent neuroscience evidence, we model the brain as a dual-system organization subject to three conflicts: asymmetric information, temporal horizon, and incentive salience. Under the first and second conflicts, we show that the uninformed system imposes a positive link between consumption and labor at every period. Furthermore, decreasing impatience endogenously emerges as a consequence of these two conflicts. Under the first and third conflicts, it becomes optimal to set a consumption cap. Finally, we discuss the behavioral implications of these rules for choice bracketing and expense tracking, and for consumption over the life cycle. (JEL D11, D74, D82, D87, D91)

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File URL: http://www.aeaweb.org/articles.php?doi=10.1257/aer.98.4.1312
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Article provided by American Economic Association in its journal American Economic Review.

Volume (Year): 98 (2008)
Issue (Month): 4 (September)
Pages: 1312-1346

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Handle: RePEc:aea:aecrev:v:98:y:2008:i:4:p:1312-46
Note: DOI: 10.1257/aer.98.4.1312
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Find related papers by JEL classification:
  • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
  • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
  • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
  • D87 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Neuroeconomics
  • D91 - Microeconomics - - Intertemporal Choice - - - Intertemporal Household Choice; Life Cycle Models and Saving

References listed on IDEAS
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As found by EconAcademics.org, the blog aggregator for Economics research:
  1. We are impatient because our brains are schizophrenic
    by Economic Logician in Economic Logic on 2008-12-05 03:31:00
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