Elements of a Neo-Veblenian Theory of the Individual

Abstract

Neuroeconomics and behavioral economics belong to the most dynamic fields in contemporary economics. However, from the viewpoint of economic methodology (Ross, Pesendorfer et al.) there are still substantial reasons why they are totally irrelevant for economic theory. This paper argues that they will only become an essential part of economics if they are embedded into a fully-fledged institutional and evolutionary paradigm. I develop a Neo-Veblenian theory of the individual that starts out from the observation that modern brain sciences do not support the notion of the brain to be an integrated and consistent rational decision apparatus. An evolutionary explanation is offered for this, which reinstates Veblen's distinction between adaptation as engineering optima and social selection. Individual identity does only emerge through communication and interaction among brains, in particular via language. The concept of the "extended brain" is proposed, which is applied to define human individuality as a social phenomenon. Thus, the systematic unity of neuroeconomics and institutional economics is established.

Keywords: neuroeconomics, modularity of the brain, neural darwinism, identity, extended brain, collective intentionality, emotions and institutions

JEL Classification: A12, B52, D00