Reason, Emotion and Information Processing in the Brain
Building on evidence from neurobiology and neuroscience, we model the physiological limitations faced by individuals in the process of decision-making that starts with sensory perception and ends in action selection. The brain sets a neuronal threshold, observes whether the neuronal cell firing activity reaches the threshold or not, and takes the optimal action conditional on that (limited) information. We show that the optimal threshold is set in a way that existing beliefs are most likely to be confirmed and least likely to be refuted. The conclusion holds in static and dynamic settings, and with linear and quadratic loss functions. We then relate our result to the somatic marker theory, and argue that it provides support for the hypothesis that emotions help decision-making. Last, we discuss the implications for choices in concrete vs. abstract situations, for interactions in cooperative vs. competitive activities, for reactions to expected vs. unexpected events, and for the choice of cognitive vs. affective encoding channels.
|Date of creation:||Oct 2007|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: 44 - 20 - 7183 8801
Fax: 44 - 20 - 7183 8820
|Order Information:|| Email: |
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Drew Fudenberg & David K Levine, 2009.
"Risk, Delay, and Convex Self-Control Costs,"
Levine's Working Paper Archive
843644000000000332, David K. Levine.
- Drew Fudenberg & David K. Levine, 2004.
"A Dual Self Model of Impulse Control,"
Harvard Institute of Economic Research Working Papers
2049, Harvard - Institute of Economic Research.
- Drew Fudenberg & David K. Levine, 2006. "A Dual Self Model of Impulse Control," Harvard Institute of Economic Research Working Papers 2112, Harvard - Institute of Economic Research.
- Fudenberg, Drew & Levine, David, 2006. "A Dual-Self Model of Impulse Control," Scholarly Articles 3196335, Harvard University Department of Economics.
- Drew Fudenberg & David K Levine, 2005. "A Dual Self Model of Impulse Control," Levine's Working Paper Archive 618897000000000876, David K. Levine.
- Rustichini, Aldo & Dickhaut, John & Ghirardato, Paolo & Smith, Kip & Pardo, Jose V., 2005.
"A brain imaging study of the choice procedure,"
Games and Economic Behavior,
Elsevier, vol. 52(2), pages 257-282, August.
- Benhabib, Jess & Bisin, Alberto, 2005. "Modeling internal commitment mechanisms and self-control: A neuroeconomics approach to consumption-saving decisions," Games and Economic Behavior, Elsevier, vol. 52(2), pages 460-492, August.
- Meyer, Margaret A, 1991. "Learning from Coarse Information: Biased Contests and Career Profiles," Review of Economic Studies, Wiley Blackwell, vol. 58(1), pages 15-41, January.
- Bechara, Antoine & Damasio, Antonio R., 2005. "The somatic marker hypothesis: A neural theory of economic decision," Games and Economic Behavior, Elsevier, vol. 52(2), pages 336-372, August.
- B. Douglas Bernheim & Antonio Rangel, 2004. "Addiction and Cue-Triggered Decision Processes," American Economic Review, American Economic Association, vol. 94(5), pages 1558-1590, December.
- Loewenstein, George & O'Donoghue, Ted, 2004. "Animal Spirits: Affective and Deliberative Processes in Economic Behavior," Working Papers 04-14, Cornell University, Center for Analytic Economics.
- Glimcher, Paul W. & Dorris, Michael C. & Bayer, Hannah M., 2005. "Physiological utility theory and the neuroeconomics of choice," Games and Economic Behavior, Elsevier, vol. 52(2), pages 213-256, August.
When requesting a correction, please mention this item's handle: RePEc:cpr:ceprdp:6535. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()The email address of this maintainer does not seem to be valid anymore. Please ask to update the entry or send us the correct address
If references are entirely missing, you can add them using this form.