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The Brain as a Hierarchical Organization

  • Isabelle Brocas
  • Juan D. Carrillo

We model the brain as a multi-agent organization. Based on recent neuroscience evidence, we assume that different systems of the brain have different time-horizons and different access to information. Introducing asymmetric information as a restriction on optimal choices generates endogenous constraints in decision-making. In this game played between brain systems, we show the optimality of a self-disciplining rule of the type “work more today if you want to consume more today” and discuss its behavioral implications for the distribution of consumption over the life-cycle. We also argue that our dual-system theory provides “micro-microfoundations” for discounting and offer testable implications that depart from traditional models with no conflict and exogenous discounting. Last, we analyze a variant in which the agent has salient incentives or biased motivations. The previous rule is then replaced by a simple, non-intrusive precept of the type “consume what you want, just don’t abuse”.

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Paper provided by UCLA Department of Economics in its series Levine's Bibliography with number 784828000000000205.

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Date of creation: 15 Jul 2005
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Handle: RePEc:cla:levrem:784828000000000205
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