NEUROECONOMICS eJOURNAL

"Dynamics of Neuroeconomics Decision-Making" Free Download

JYOTI SATPATHY, Independent
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Quantification of choice has been a major area of research for neuro scientists for several decades. This is, in part, due to the discovery of the ‘Matching Law’ that stipulates that relative response rate on concurrently available alternatives ‘match’ the available relative reinforcement rates. This theoretical construct has been developed to describe response allocation in more complex situations. People often fail to design ‘rational’ decisions. Economics agents are subject to multiple biases that affect the way they perceive events, act upon them and learn from experience. These behaviours cannot be ignored since they have disastrous consequences for organisations. When faced with complex decision, individuals engage in simplifying strategies. Adaptive decision making in real-world contexts relies on strategic simplifications of decision problems. Yet, neural mechanisms that shape these strategies and their implementation remain largely unknown. Although we now know much about how brain encodes specific decision factors, much less is known about how brain selects among multiple strategies for managing computational demands of complex decision-making task. Expansion of neuroeconomics parallels development of cognitive science. Neuroeconomics has bridged the contrasting fields of economics and psychology. Economics, psychology, and neuroscience are converging today into a single, unified discipline with the ultimate aim of providing a single, general theory of human behaviour. This is the emerging field of Neuroeconomics in which consilience, accordance of two or more inductions drawn from different groups of phenomena, seems to be operating. Economists and psychologists are providing rich conceptual tools for understanding and modeling behaviour, while neurobiologists provide tools for the study of mechanism. The goal of this discipline is thus to understand the processes that connect sensation and action by revealing the neurobiological mechanisms by which decisions are made. Such union is almost exclusively attributable to changes within economics. Neuroeconomics has inspired change because the important findings have posed more of a challenge to standard economics perspective. The important source of inspiration for neuro economist has been neuro judgment research, which can, in turn, be seen as an amalgamation of ideas from cognitive science and economics. Neuroeconomics has primarily challenged customary economics postulation that decision-making is a unitary process a simple matter of integrated and coherent utility maximization suggesting instead that it is driven by interaction between automatic and controlled processes. Despite substantial advances, question of how we design and how we ought to craft judgments and decisions has engaged researchers for decades, with different disciplines approaching the problem through characteristically different techniques. However, neuroeconomics decision making has recently emerged as an inter-disciplinary effort to bridge this gap. It has sought to integrate ideas from fields of organisational psychology, neuroscience and neuroeconomics in an effort to specify accurate models of choice and decision. Research investigates neural bases of decision predictability and value, central parameters in economics model of expected utility. Neuro-multiple-systems approach to decision-making, in turn, influences economics, a perspective strongly rooted in organisational psychology and neuroscience. Integration of these approaches and methodologies offers exciting potential for construction of near-accurate models of decision-making.

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About this eJournal

This eJournal distributes working and accepted paper abstracts focused on research where economic outcomes are the product of many individual decisions, constrained by scarcity, and equilibrium forces that simultaneously shape a person's social networks and the institutionally defined rules of the game. Decisions are made by computations in the brain which produce action-choices that directly affect the homeostatic wellbeing of the individual and choices that indirectly change wellbeing by changing an individual's future constraints, the scope of their social networks, and their message sending rights within the institutions they participate. Neuroeconomics broadly speaking is interested in the study of these computations and the resulting choices they produce. This includes experiments that attempt to understand the mechanisms of neuronal computations that produce action-choices, theories which predict how neuronal computations in socio-economic environments produce decisions, outcomes and wellbeing, and policy which use our understanding of neuoroeconomic behavior to either build or defend better solutions to societal problems.

Editors: Michael C. Jensen, Harvard University, and Kevin A. McCabe, George Mason University

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ERN SUBJECT MATTER EJOURNALS

MICHAEL C. JENSEN
Social Science Electronic Publishing (SSEP), Inc., Harvard Business School, National Bureau of Economic Research (NBER), European Corporate Governance Institute (ECGI)
Email: michael_jensen@ssrn.com

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Advisory Board

Neuroeconomics eJournal

ANDREW W. LO
Harris & Harris Group Professor, Massachusetts Institute of Technology (MIT) - Sloan School of Management, Principal Investigator, Massachusetts Institute of Technology (MIT) - Computer Science and Artificial Intelligence Laboratory (CSAIL), National Bureau of Economic Research (NBER)

P. READ MONTAGUE
Professor, Baylor University - Department of Neuroscience

VERNON L. SMITH
Professor of Economics and Law, Chapman University - Economic Science Institute, Chapman University School of Law