Neuroeconomics Fundamentals mobi

This in an excerpt from this book
The massive movement within Economics itself is largely responsible for the bridging that neuroeconomics provided for economics and psychology. Recent models in economics (Benhabib & Bisin 2005, Bernheim & Rangel 2004, Brocas & Carrillo 2006, Fudenberg & Levine 2006, Loewenstein & O’Donoghue 2004) have come to embrace a multiple systems perspective, which has long been popular among psychologists (Chaiken & Trope 1999, Posner & Snyder 1975, Schiffrin & Schneider 1977).

Although neu- roeconomics has not yet produced many findings that directly challenge assumptions held within psychology (only one of the neuroeconomics papers discussed above, Shiv et al. 2005, was published in a psychology journal), the field will undoubtedly eventually focus on issues of importance to both fields. For example, psychologists have often questioned how multiple systems interact to influence behavior. They may compete, or one system may provide a default response that can subsequently be overridden by another system, hypotheses that Evans (2008) respectively refers to as “parallel-competitive” and ”default-interventionist”. Economists who studied and tried to come up with an official model or framework that can efficiently highlight the interaction of more than one systems are very much interested in this very question. It is obvious that neuro economists would spare no opportunity in addressing this situation empirically sooner than later.

Though majority of changes brought in by neuroeconomics within Economics in general were positive and very encouraging but there had been certain reactions which were not very encouraging and were considered more extreme following one or two differently known pattern. This is undoubtedly beneficial to those economists and to the field.However,such views probably should have been adopted much earlier based on behavioral research. The overweighting of neural relative to behavioral evidence is illustrated in the bibliographies of the five new economic models mentioned above.

For example, only one cites Chaiken & Trope’s (1999) well-known review of dual-process re- search, whereas citations of neuroscientific studies abound. On the other hand, some economists, still reeling from the incorporation of psychology into economics and the rise of behavioral economics, are even more aghast at the infiltration of economics by neuroscience. They reject the new phrenology (Harrison 2005, p. 794) based on the argument that neural data cannot refute economic models, which make predictions about behavior rather than underlying processes (Gul & Pesendorfer 2005).

According to this view, the failure to find neural correlates of “as- if” processes in economic models is not a failure of the models, but rather a failure to test all of it with high precision. Generally Economists everywhere evaluate assumptions about underlying processes based on the accuracy of their implications, and psychologically implausible assumptions are often tolerated if they lead to satisfactory behavioral predictions. However, to the extent that correct assumptions about underlying processes make better (and fresh) predictions, researchers should strive to refine those assumptions. Neuroeconomic research aims to facilitate this refinement and suggest new models.