Dopamine and Reward Prediction Error: An Axiomatic Approach to Neuroeconomics

Abstract

Reinforcement learning theory has produced important insights into economic behavior. Intriguingly, neuroscientists recently discovered a plausible mechanism through which reinforcement may be encoded in the brain. Yet their resulting "dopaminergic reward prediction error" hypothesis has not yet been incorporated into economics. We develop an axiomatic model that characterizes the empirical implications of this theory for an idealized data set comprising both neuroscientific measurements and choices. Our axiomatization removes the language barrier between economics and neuroscience. This will allow "neuroeconomic" experimental protocols to be developed appropriate to the questions motivating economic, as opposed to purely neuroscientific, interest in learning.

Keywords: neuroeconomics, decision theory, learning

JEL Classification: D11