IDEAS home Printed from https://ideas.repec.org/a/aea/aejmic/v6y2014i2p1-36.html
   My bibliography  Save this article

Neural Activity Reveals Preferences without Choices

Author

Listed:
  • Alec Smith
  • B. Douglas Bernheim
  • Colin F. Camerer
  • Antonio Rangel

Abstract

We investigate the feasibility of inferring the choices people would make (if given the opportunity) based on their neural responses to the pertinent prospects when they are not engaged in actual decision making. The ability to make such inferences is of potential value when choice data are unavailable, or limited in ways that render standard methods of estimating choice mappings problematic. We formulate prediction models relating choices to "nonchoice" neural responses, and use them to predict out-of-sample choices for new items and for new groups of individuals. The predictions are sufficiently accurate to establish the feasibility of our approach.

Suggested Citation

  • Alec Smith & B. Douglas Bernheim & Colin F. Camerer & Antonio Rangel, 2014. "Neural Activity Reveals Preferences without Choices," American Economic Journal: Microeconomics, American Economic Association, vol. 6(2), pages 1-36, May.
  • Handle: RePEc:aea:aejmic:v:6:y:2014:i:2:p:1-36
    Note: DOI: 10.1257/mic.6.2.1
    as

    Download full text from publisher

    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/mic.6.2.1
    Download Restriction: no

    File URL: http://www.aeaweb.org/aej/mic/app/0602/2012-0113_app.pdf
    Download Restriction: no

    File URL: http://www.aeaweb.org/aej/mic/data/0602/2012-0113_data.zip
    Download Restriction: no

    File URL: http://www.aeaweb.org/aej/mic/ds/0602/2012-0113_ds.zip
    Download Restriction: Access to full text is restricted to AEA members and institutional subscribers.
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. B. Douglas Bernheim, 2009. "On the Potential of Neuroeconomics: A Critical (but Hopeful) Appraisal," American Economic Journal: Microeconomics, American Economic Association, vol. 1(2), pages 1-41, August.
    2. Alexandre Belloni & Victor Chernozhukov & Christian Hansen, 2011. "Inference for High-Dimensional Sparse Econometric Models," Papers 1201.0220, arXiv.org.
    3. Loomis, John B. & Traynor, Kerri & Brown, Thomas C., 1999. "Trichotomous Choice: A Possible Solution To Dual Response Objectives In Dichotomous Choice Contingent Valuation Questions," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 24(2), pages 1-12, December.
    4. Karen Blumenschein & GlennC. Blomquist & Magnus Johannesson & Nancy Horn & Patricia Freeman, 2008. "Eliciting Willingness to Pay Without Bias: Evidence from a Field Experiment," Economic Journal, Royal Economic Society, vol. 118(525), pages 114-137, January.
    5. Jacquemet, Nicolas & Joule, Robert-Vincent & Luchini, Stéphane & Shogren, Jason F., 2013. "Preference elicitation under oath," Journal of Environmental Economics and Management, Elsevier, vol. 65(1), pages 110-132.
    6. R. K. Blamey & J. W. Bennett & M. D. Morrison, 1999. "Yea-Saying in Contingent Valuation Surveys," Land Economics, University of Wisconsin Press, vol. 75(1), pages 126-141.
    7. John A. Fox & Jason F. Shogren & Dermot J. Hayes & James B. Kliebenstein, 1998. "CVM-X: Calibrating Contingent Values with Experimental Auction Markets," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 80(3), pages 455-465.
    8. Faruk Gul & Wolfgang Pesendorfer, 2005. "The Case for Mindless Economics," Levine's Working Paper Archive 784828000000000581, David K. Levine.
    9. Kurz, Mordecai, 1974. "Experimental approach to the determination of the demand for public goods," Journal of Public Economics, Elsevier, vol. 3(4), pages 329-348, November.
    10. Hui Zou & Trevor Hastie, 2005. "Addendum: Regularization and variable selection via the elastic net," Journal of the Royal Statistical Society Series B, Royal Statistical Society, vol. 67(5), pages 768-768, November.
    11. Shogren, Jason F., 1993. "Experimental Markets And Environmental Policy," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 22(2), pages 1-13, October.
    12. List, John A. & Shogren, Jason F., 1998. "Calibration of the difference between actual and hypothetical valuations in a field experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 37(2), pages 193-205, October.
    13. Kurz, Mordecai, 1974. "Experimental approach to the determination of the demand for public goods : A reply," Journal of Public Economics, Elsevier, vol. 3(4), pages 431-432, November.
    14. List, John A. & Shogren, Jason F., 2002. "Calibration of Willingness-to-Accept," Journal of Environmental Economics and Management, Elsevier, vol. 43(2), pages 219-233, March.
    15. James Murphy & P. Allen & Thomas Stevens & Darryl Weatherhead, 2005. "A Meta-analysis of Hypothetical Bias in Stated Preference Valuation," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 30(3), pages 313-325, March.
    16. Cummings, Ronald G & Harrison, Glenn W & Rutstrom, E Elisabet, 1995. "Homegrown Values and Hypothetical Surveys: Is the Dichotomous Choice Approach Incentive-Compatible?," American Economic Review, American Economic Association, vol. 85(1), pages 260-266, March.
    17. Brownstone, David & Bunch, David S. & Train, Kenneth, 2000. "Joint mixed logit models of stated and revealed preferences for alternative-fuel vehicles," Transportation Research Part B: Methodological, Elsevier, vol. 34(5), pages 315-338, June.
    18. Laura O. Taylor & Ronald G. Cummings, 1999. "Unbiased Value Estimates for Environmental Goods: A Cheap Talk Design for the Contingent Valuation Method," American Economic Review, American Economic Association, vol. 89(3), pages 649-665, June.
    19. Kenneth A. Small & Clifford Winston & Jia Yan, 2005. "Uncovering the Distribution of Motorists' Preferences for Travel Time and Reliability," Econometrica, Econometric Society, vol. 73(4), pages 1367-1382, July.
    20. Magnus Johannesson & Bengt Liljas & Per-Olov Johansson, 1998. "An experimental comparison of dichotomous choice contingent valuation questions and real purchase decisions," Applied Economics, Taylor & Francis Journals, vol. 30(5), pages 643-647.
    21. John List & Craig Gallet, 2001. "What Experimental Protocol Influence Disparities Between Actual and Hypothetical Stated Values?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 20(3), pages 241-254, November.
    22. Shogren, Jason F., 2006. "Experimental Methods and Valuation," Handbook of Environmental Economics, in: K. G. Mäler & J. R. Vincent (ed.), Handbook of Environmental Economics, edition 1, volume 2, chapter 19, pages 969-1027, Elsevier.
    23. repec:ebl:ecbull:v:3:y:2004:i:6:p:1-13 is not listed on IDEAS
    24. Hui Zou & Trevor Hastie, 2005. "Regularization and variable selection via the elastic net," Journal of the Royal Statistical Society Series B, Royal Statistical Society, vol. 67(2), pages 301-320, April.
    25. Jason Shogren, 2006. "Valuation in the Lab," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 34(1), pages 163-172, May.
    26. Ian J. Bateman & Richard T. Carson & Brett Day & Michael Hanemann & Nick Hanley & Tannis Hett & Michael Jones-Lee & Graham Loomes, 2002. "Economic Valuation with Stated Preference Techniques," Books, Edward Elgar Publishing, number 2639.
    27. Joseph Tao-yi Wang & Michael Spezio & Colin F. Camerer, 2010. "Pinocchio's Pupil: Using Eyetracking and Pupil Dilation to Understand Truth Telling and Deception in Sender-Receiver Games," American Economic Review, American Economic Association, vol. 100(3), pages 984-1007, June.
    28. McKinley Blackburn & Glenn W. Harrison & E. Elisabet Rutström, 1994. "Statistical Bias Functions and Informative Hypothetical Surveys," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 76(5), pages 1084-1088.
    29. Jianqing Fan & Jinchi Lv & Lei Qi, 2011. "Sparse High-Dimensional Models in Economics," Annual Review of Economics, Annual Reviews, vol. 3(1), pages 291-317, September.
    30. Champ, Patricia A. & Bishop, Richard C. & Brown, Thomas C. & McCollum, Daniel W., 1997. "Using Donation Mechanisms to Value Nonuse Benefits from Public Goods," Journal of Environmental Economics and Management, Elsevier, vol. 33(2), pages 151-162, June.
    31. Joseph Little & Robert Berrens, 2004. "Explaining Disparities between Actual and Hypothetical Stated Values: Further Investigation Using Meta-Analysis," Economics Bulletin, AccessEcon, vol. 3(6), pages 1-13.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jonathan A. Parker & Nicholas S. Souleles, 2017. "Reported Effects vs. Revealed-Preference Estimates: Evidence from the propensity to spend tax rebates," NBER Working Papers 23920, National Bureau of Economic Research, Inc.
    2. Clithero, John A., 2018. "Improving out-of-sample predictions using response times and a model of the decision process," Journal of Economic Behavior & Organization, Elsevier, vol. 148(C), pages 344-375.
    3. Fadong Chen & Urs Fischbacher, 2016. "Response time and click position: cheap indicators of preferences," Journal of the Economic Science Association, Springer;Economic Science Association, vol. 2(2), pages 109-126, November.
    4. Colin F. Camerer & Gideon Nave & Alec Smith, 2019. "Dynamic Unstructured Bargaining with Private Information: Theory, Experiment, and Outcome Prediction via Machine Learning," Management Science, INFORMS, vol. 65(4), pages 1867-1890, April.
    5. Motoki, Kosuke & Suzuki, Shinsuke & Kawashima, Ryuta & Sugiura, Motoaki, 2020. "A Combination of Self-Reported Data and Social-Related Neural Measures Forecasts Viral Marketing Success on Social Media," Journal of Interactive Marketing, Elsevier, vol. 52(C), pages 99-117.
    6. George Judge, 2015. "Entropy Maximization as a Basis for Information Recovery in Dynamic Economic Behavioral Systems," Econometrics, MDPI, vol. 3(1), pages 1-10, February.
    7. Xiaoxue Gao & Eshin Jolly & Hongbo Yu & Huiying Liu & Xiaolin Zhou & Luke J. Chang, 2024. "The psychological, computational, and neural foundations of indebtedness," Nature Communications, Nature, vol. 15(1), pages 1-17, December.
    8. Ryan Webb & Paul W. Glimcher & Kenway Louie, 2021. "The Normalization of Consumer Valuations: Context-Dependent Preferences from Neurobiological Constraints," Management Science, INFORMS, vol. 67(1), pages 93-125, January.
    9. Daniel Serra, 2019. "La neuroéconomie en question : débats et controverses," Working Papers halshs-02160911, HAL.
    10. Dimitris Christelis & Dimitris Georgarakos & Tullio Jappelli & Luigi Pistaferri & Maarten van Rooij, 2019. "Asymmetric Consumption Effects of Transitory Income Shocks," Economic Journal, Royal Economic Society, vol. 129(622), pages 2322-2341.
    11. Smith, Trenton G., 2023. "Endocrine state is the physical manifestation of subjective beliefs," Journal of Economic Psychology, Elsevier, vol. 96(C).
    12. Glimcher, Paul W. & Tymula, Agnieszka A., 2023. "Expected subjective value theory (ESVT): A representation of decision under risk and certainty," Journal of Economic Behavior & Organization, Elsevier, vol. 207(C), pages 110-128.
    13. Lusk, Jayson L. & Crespi, John M. & McFadden, Brandon R. & Cherry, J. Bradley C. & Martin, Laura & Bruce, Amanda, 2016. "Neural antecedents of a random utility model," Journal of Economic Behavior & Organization, Elsevier, vol. 132(PA), pages 93-103.
    14. Ryan H Murphy, 2023. "The clear expectation of cultural betterment in the face of rising living standards," Rationality and Society, , vol. 35(3), pages 338-365, August.
    15. Guidon Fenig & Giovanni Gallipoli & Yoram Halevy, 2018. "Piercing the "Payoff Function" Veil: Tracing Beliefs and Motives," Working Papers tecipa-625, University of Toronto, Department of Economics.
    16. Colby, Bonnie, 2023. "Teaching Water Resource Economics for Policy Analysis," Applied Economics Teaching Resources (AETR), Agricultural and Applied Economics Association, vol. 5(3), September.
    17. Halko, Marja-Liisa & Lappalainen, Olli & Sääksvuori, Lauri, 2021. "Do non-choice data reveal economic preferences? Evidence from biometric data and compensation-scheme choice," Journal of Economic Behavior & Organization, Elsevier, vol. 188(C), pages 87-104.
    18. Webb, Ryan & Mehta, Nitin & Levy, Ifat, 2021. "Assessing consumer demand with noisy neural measurements," Journal of Econometrics, Elsevier, vol. 222(1), pages 89-106.
    19. Krajbich, Ian & Camerer, Colin & Rangel, Antonio, 2017. "Exploring the scope of neurometrically informed mechanism design," Games and Economic Behavior, Elsevier, vol. 101(C), pages 49-62.
    20. John A. Clithero & Jae Joon Lee & Joshua Tasoff, 2019. "Supervised Machine Learning for Eliciting Individual Demand," Papers 1904.13329, arXiv.org, revised Feb 2021.
    21. Daniel Serra, 2021. "Decision-making: from neuroscience to neuroeconomics—an overview," Theory and Decision, Springer, vol. 91(1), pages 1-80, July.
    22. Clithero, John A., 2018. "Response times in economics: Looking through the lens of sequential sampling models," Journal of Economic Psychology, Elsevier, vol. 69(C), pages 61-86.
    23. Guo, Julie & Tymula, Agnieszka, 2021. "Waterfall illusion in risky choice – exposure to outcome-irrelevant gambles affects subsequent valuation of risky gambles," European Economic Review, Elsevier, vol. 139(C).
    24. Ryan Webb, 2019. "The (Neural) Dynamics of Stochastic Choice," Management Science, INFORMS, vol. 65(1), pages 230-255, January.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. B. Douglas Bernheim & Daniel Bjorkegren & Jeffrey Naecker & Antonio Rangel, 2013. "Non-Choice Evaluations Predict Behavioral Responses to Changes in Economic Conditions," NBER Working Papers 19269, National Bureau of Economic Research, Inc.
    2. Murphy, James J. & Stevens, Thomas H., 2004. "Contingent Valuation, Hypothetical Bias, and Experimental Economics," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 33(2), pages 1-11, October.
    3. John K. Horowitz & Kenneth E. McConnell & James J. Murphy, 2013. "Behavioral foundations of environmental economics and valuation," Chapters, in: John A. List & Michael K. Price (ed.), Handbook on Experimental Economics and the Environment, chapter 4, pages 115-156, Edward Elgar Publishing.
    4. Kanya, Lucy & Saghera, Sabina & Lewin, Alex & Fox-Rushby, Julia, 2019. "The criterion validity of willingness to pay methods: a systematic review and meta-analysis of the evidence," LSE Research Online Documents on Economics 100741, London School of Economics and Political Science, LSE Library.
    5. Robert J. Johnston & Kevin J. Boyle & Wiktor (Vic) Adamowicz & Jeff Bennett & Roy Brouwer & Trudy Ann Cameron & W. Michael Hanemann & Nick Hanley & Mandy Ryan & Riccardo Scarpa & Roger Tourangeau & Ch, 2017. "Contemporary Guidance for Stated Preference Studies," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 4(2), pages 319-405.
    6. Jinkwon Lee & Uk Hwang, 2016. "Hypothetical Bias in Risk Preferences as a Driver of Hypothetical Bias in Willingness to Pay: Experimental Evidence," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 65(4), pages 789-811, December.
    7. Kanya, Lucy & Sanghera, Sabina & Lewin, Alex & Fox-Rushby, Julia, 2019. "The criterion validity of willingness to pay methods: A systematic review and meta-analysis of the evidence," Social Science & Medicine, Elsevier, vol. 232(C), pages 238-261.
    8. Catherine L. Kling & Daniel J. Phaneuf & Jinhua Zhao, 2012. "From Exxon to BP: Has Some Number Become Better Than No Number?," Journal of Economic Perspectives, American Economic Association, vol. 26(4), pages 3-26, Fall.
    9. Eva Camacho-Cuena & Aurora García-Gallego & Nikolaos Georgantzís & Gerardo Sabater-Grande, 2004. "An Experimental Validation of Hypothetical WTP for a Recyclable Product," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 27(3), pages 313-335, March.
    10. Nicolas Jacquemet & Alexander James & Stéphane Luchini & Jason Shogren, 2011. "Social Psychology and Environmental Economics: A New Look at ex ante Corrections of Biased Preference Evaluation," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 48(3), pages 413-433, March.
    11. James Murphy & P. Allen & Thomas Stevens & Darryl Weatherhead, 2005. "A Meta-analysis of Hypothetical Bias in Stated Preference Valuation," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 30(3), pages 313-325, March.
    12. Richard T. Carson, 2011. "Contingent Valuation," Books, Edward Elgar Publishing, number 2489.
    13. Fifer, Simon & Rose, John M., 2016. "Can you ever be certain? Reducing hypothetical bias in stated choice experiments via respondent reported choice certaintyAuthor-Name: Beck, Matthew J," Transportation Research Part B: Methodological, Elsevier, vol. 89(C), pages 149-167.
    14. Liljas, Bengt & Blumenschein, Karen, 2000. "On hypothetical bias and calibration in cost-benefit studies," Health Policy, Elsevier, vol. 52(1), pages 53-70, May.
    15. Whitehead, John C. & Cherry, Todd L., 2007. "Willingness to pay for a Green Energy program: A comparison of ex-ante and ex-post hypothetical bias mitigation approaches," Resource and Energy Economics, Elsevier, vol. 29(4), pages 247-261, November.
    16. Shogren, Jason F., 2006. "Experimental Methods and Valuation," Handbook of Environmental Economics, in: K. G. Mäler & J. R. Vincent (ed.), Handbook of Environmental Economics, edition 1, volume 2, chapter 19, pages 969-1027, Elsevier.
    17. Loomis, John B., 2014. "2013 WAEA Keynote Address: Strategies for Overcoming Hypothetical Bias in Stated Preference Surveys," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 39(1), pages 1-13, April.
    18. Ana Bedate & Luis Herrero & José Sanz, 2009. "Economic valuation of a contemporary art museum: correction of hypothetical bias using a certainty question," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 33(3), pages 185-199, August.
    19. Haghani, Milad & Bliemer, Michiel C.J. & Rose, John M. & Oppewal, Harmen & Lancsar, Emily, 2021. "Hypothetical bias in stated choice experiments: Part II. Conceptualisation of external validity, sources and explanations of bias and effectiveness of mitigation methods," Journal of choice modelling, Elsevier, vol. 41(C).
    20. Milad Haghani & Michiel C. J. Bliemer & John M. Rose & Harmen Oppewal & Emily Lancsar, 2021. "Hypothetical bias in stated choice experiments: Part I. Integrative synthesis of empirical evidence and conceptualisation of external validity," Papers 2102.02940, arXiv.org.

    More about this item

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D87 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Neuroeconomics

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aea:aejmic:v:6:y:2014:i:2:p:1-36. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Michael P. Albert (email available below). General contact details of provider: https://edirc.repec.org/data/aeaaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.