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The Brain as a Hierarchical Organization

  • Isabelle Brocas
  • Juan D Carrillo

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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Paper provided by UCLA Department of Economics in its series Levine's Bibliography with number 122247000000001587.

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Date of creation: 01 Oct 2007
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Handle: RePEc:cla:levrem:122247000000001587
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