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The Brain as a Hierarchical Organization

  • Brocas, Isabelle
  • Carrillo, Juan D

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 behavioural implications for the distribution of consumption over the life-cycle. We also argue that our split-self theory provides 'micro-microfoundations' for discounting and offer testable implications that depart from traditional models with no conflict and exogenous discounting. Last, we analyse 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 C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 5168.

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Date of creation: Aug 2005
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Handle: RePEc:cpr:ceprdp:5168
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