The case for mindful customer protection: a review and some thoughts on neuroeconomics and neurofinance

This paper summarizes the history of neuroeconomics, provides an overview of the current state of the debate, describes the most commonly used analytical tools and reviews some relevant examples from the literature on neurofinance. The goal is to contribute to an understanding of the discipline and to an assessment of its potential benefits for customer protection authorities. Our review shows that the debate between proponents and sceptics over the use of neuroscience tools in economics is ongoing and often heated. However, we also point out that even those who are critics tend to recognize that neuroeconomics can, in principle, provide a contribution to traditional economics, particularly in the applied domain. Regulators and supervisors could benefit from this contribution by incorporating neuroeconomics-based insights into the design, implementation and monitoring of consumer protection policies such as in the regulatory process and financial education initiatives. Moreover, neuroeconomics experiments can be used to assess consumer protection practices prior to their formal legal mandate. Our review also shows that, despite the large body of work in neurofinance, much research can still be done on customers of banking and financial services and products.