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Neuroeconomic Foundations of Economic Choice--Recent Advances

Author

Listed:
  • Ernst Fehr
  • Antonio Rangel
Abstract
Neuroeconomics combines methods and theories from neuroscience psychology, economics, and computer science in an effort to produce detailed computational and neurobiological accounts of the decision-making process that can serve as a common foundation for understanding human behavior across the natural and social sciences. Because neuroeconomics is a young discipline, a sufficiently sound structural model of how the brain makes choices is not yet available. However, the contours of such a computational model are beginning to arise; and, given the rapid progress, there is reason to be hopeful that the field will eventually put together a satisfactory structural model. This paper has two goals: First, we provide an overview of what has been learned about how the brain makes choices in two types of situations: simple choices among small numbers of familiar stimuli (like choosing between an apple or an orange), and more complex choices involving tradeoffs between immediate and future consequences (like eating a healthy apple or a less-healthy chocolate cake). Second, we show that, even at this early stage, insights with important implications for economics have already been gained.

Suggested Citation

  • Ernst Fehr & Antonio Rangel, 2011. "Neuroeconomic Foundations of Economic Choice--Recent Advances," Journal of Economic Perspectives, American Economic Association, vol. 25(4), pages 3-30, Fall.
    • Handle: RePEc:aea:jecper:v:25:y:2011:i:4:p:3-30
    Note: DOI: 10.1257/jep.25.4.3
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    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/jep.25.4.3
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    File URL: http://www.aeaweb.org/jep/app/2504_Fehr_app.pdf
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    References listed on IDEAS

    as
    1. B. Douglas Bernheim & Antonio Rangel, 2009. "Beyond Revealed Preference: Choice-Theoretic Foundations for Behavioral Welfare Economics," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 124(1), pages 51-104.
    2. B. Douglas Bernheim, 2009. "Behavioral Welfare Economics," Journal of the European Economic Association, MIT Press, vol. 7(2-3), pages 267-319, 04-05.
    3. C. Eisenegger & M. Naef & R. Snozzi & M. Heinrichs & E. Fehr, 2010. "Prejudice and truth about the effect of testosterone on human bargaining behaviour," Nature, Nature, vol. 463(7279), pages 356-359, January.
    4. Basten, Ulrike & Biele, Guido & Heekeren, Hauke R. & Fiebach, Christian J., 2010. "How the brain integrates costs and benefits during decision making," SFB 649 Discussion Papers 2010-063, Humboldt University Berlin, Collaborative Research Center 649: Economic Risk.
    5. Benjamin Bushong & Lindsay M. King & Colin F. Camerer & Antonio Rangel, 2010. "Pavlovian Processes in Consumer Choice: The Physical Presence of a Good Increases Willingness-to-Pay," American Economic Review, American Economic Association, vol. 100(4), pages 1556-1571, September.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    JEL classification:

    • D87 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Neuroeconomics
    • D87 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Neuroeconomics

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