3. Neuroeconomics Flashcards
(18 cards)
What is neuroeconomics?
A field combining neuroscience and economics to study how the brain makes social and economic decisions.
What are the “biological micro-foundations” of economic cognition?
Biological micro-foundations: neurochemical mechanisms, like brain systems, neurons, genes, heart rate.
Economic cognition: mental representations, emotions, expectations, learning, memory, preferences, decision-making, and behaviour.
What are the differences between economics and neuroeconomics?
Traditional models are black-box and based on “as if” rationality; neuroeconomics studies how decisions are made using brain data.
Why study Neuroeconomics?
- Are components of behavioral models represented in brain structures?
- Can insights into how the brain works improve economic modelling?
- Can those insights discriminate between alternative models?
What are the two main types of methods in neuroeconomics?
- Measurement techniques (e.g., neuron recordings, positron emission tomography (PET))
- Manipulation techniques (alter activity in specific areas of the brain to observe associated behavioural change)
EEG
Measures electrical potentials at the skull, caused by neural activity.
Limitations:
- requires large number of repetitions of the same situation
- eye movement may affect result
- neurons not aligned in some regions, activity may cancel out
What does fMRI measure?
Functional Magenetic Resonance:
- measures brain activity by detecting changes in blood oxygen levels, which increase in regions with higher neural activity
Limitation:
- costly
- non-natural experimental environment
What are pharmacological methods used for?
Giving drugs that either block or stimulate specific neurotransmitter receptors to study how these chemical systems affect behaviour and mental processes.
What does Transcranial Magentic Stimulation (TMS) do?
very common method
- a non-invasive technique that temporarily disrupts activity in a specific brain region using magnetic pulses, creating “virtual lesions” to study cognitive functions.
Limitation:
- can only target surface-level brain regions, limiting its effectiveness in studying deeper brain structures
Animal models
- understand human brain function by using animals with similar brain structures to examine processes like addiction, learning, and decision-making, and allows for invasive techniques like lesioning and single-cell recording
What is the purpose of studying patients with neural anomalies?
To identify brain areas essential for specific cognitive functions.
e.g.
* when both amygdalas are destroyed in an animal, the animal becomes tame, sexually inactive, and indifferent to danger, such as snakes or aggressive members of its species.
* rats become relatively fearless after knocking out a gene that makes a key protein for amygdala function
What are neural markers?
Markers—such as genetic and neural features—can serve as stable indicators of individual decision-making traits (e.g. risk tolerance or delay aversion) and help predict economic behavior across contexts by linking preferences to brain structure, connectivity, or neurotransmitter systems.
Common limitations of measuring techniques
- small sample size
- non-human respond differently
- limited capacity of interventions (ethical and health issues)
- markers are not always precise
- costly and non-natural experimental environment
What are the two main systems in decision-making?
Affective System: fast, automatic, emotional, myopic (see the cake and eat straight away)
Analytic System: slow, deliberative, effortful, future-oriented (see the cake and pause, think about long-term health goals)
Sanfey et al. 2003 Ultimatum game
A have $10, offer to B, B can accept or reject. If reject, both get 0
* measure brain activations by fMRI
fair and unfair offers from:
1. offers from human
2. random offers from computer
3. offer from a button press
- bilateral anterior insula: emotion-related region
- dorsolateral prefrontal cortex: cognition-related, achievement of goals, execution of actions
Findings:
Unfair offers from humans triggered stronger activation in emotion-related brain regions (especially the anterior insula) compared to unfair offers from a computer
importance of emotional influences in human decision-making
Kosfeld et al. 2005
oxytocin
- To investigate whether the neuropeptide oxytocin influences trust among humans in economic transactions
- Methodology
- 128 male volunteers
- Double blind placebo controlled experiment
- Participants received oxytocin or placebop
- Trust game - investor sends money to trustee, amount tripled then trustee decides how much to return to the investor
- Findings:
- Proportion of participants exhibiting max trust level (transferring full amount) was 45% over 21% in placebo group
Oxytocin had no significant effect on risk taking behaviour in a control task, suggesting its specific role in social trust rather than general risk propensity.
Coates et. al. (2009)
- recruit 49 male traders from a trading floor in London
- use P&L statement as a measure of performance
Findings: the lower a trader’s 2D:4D ratio, the greater his net profit
- Prenatal exposure to androgens may shape traits linked to risk-taking, quick visual processing, and fast reactions, possibly through early effects on brain structure and function.
calvin please complete and explain to jess thanks :)
McClure et. al. (2004)
Mclure et al. (2004)
- To investigate how brand knowledge influences both behavioural preferences and neural responses when consuming culturally familiar beverages, specifically Coke and Pepsi.
- People went under behavioural taste tests and fMRI scans
- Conditions:
- Anonymous Delivery: Participants consumed Coke and Pepsi without brand identification
- Brand cued delivery: Participants were informed of the brand before consumption
- Findings:
-When drinks were tasted anonymously, preference was linked to activity in the ventromedial prefrontal cortex (vmPFC) — a region associated with sensory reward.
-When brand labels were shown (e.g. “Coke”), brain responses shifted — cognitive and emotional areas (like the hippocampus and DLPFC) became active.
- Brand knowledge changed both preferences and brain activity, even though the drinks were the same.
