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The Brain as a Hierarchical Organization

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  • Carrillo, Juan
  • Brocas, Isabelle

Abstract

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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  • Carrillo, Juan & Brocas, Isabelle, 2005. "The Brain as a Hierarchical Organization," CEPR Discussion Papers 5168, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:5168
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    More about this item

    Keywords

    Neuroeconomics; Dual self model;

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • Z0 - Other Special Topics - - General

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