Skip to main content
×
Home
    • Aa
    • Aa

NEUROECONOMICS: A CRITICAL RECONSIDERATION

  • Glenn W. Harrison (a1)
Abstract

Understanding more about how the brain functions should help us understand economic behaviour. But some would have us believe that it has done this already, and that insights from neuroscience have already provided insights in economics that we would not otherwise have. Much of this is just academic marketing hype, and to get down to substantive issues we need to identify that fluff for what it is. After we clear away the distractions, what is left? The answer is that a lot is left, but it is still all potential. That is not a bad thing, or a reason to stop the effort, but it does point to the need for a serious reconsideration of what neuroeconomics is and what passes for explanation in this literature. I argue that neuroeconomics can be a valuable field, but not the way it is being developed and “sold” now. The same is true more generally of behavioural economics, which shares many of the methodological flaws of neuroeconomics.

Copyright
Corresponding author
*Department of Economics, College of Business Administration, University of Central Florida, USA, and Durham Business School, Durham University, UK (part-time). Email contact: gharrison@research.bus.ucf.edu.
Linked references
Hide All

This list contains references from the content that can be linked to their source. For a full set of references and notes please see the PDF or HTML where available.

E. L. Allgower and K. Georg . 2003. Introduction to numerical continuation methods. Phildaelphia: Society for Industrial and Applied Mathematics.

S. Andersen , G. W. Harrison , M. I. Lau and E. E. Rutström . 2008a. Eliciting risk and time preferences. Econometrica 76: 583618.

S. Andersen , G. W. Harrison , M. I. Lau and E. E. Rutström . 2008b. Lost in state space: are preferences stable? International Economic Review 49: 10911112.

N. C. Andreasen , S. Arndt , V. Swayze , T. Cizadlo , M. Flaum , D. O'Leary , J. C. Ehrhardt and W. T. C. Yuh . 1994. Thalamic abnormalities in schizophrenia visualized through magnetic resonance image averaging. Science 266: 294–8.

L. F. Barrett , M. M. Tugade and R. W. Engle . 2004. Individual differences in working memory capacity and dual-process theories of the mind. Psychological Bulletin 130: 553–73.

J. Benhabib and A. Bisin . 2005. Modeling internal commitment mechanisms and self-control: A neuroeconomics approach to consumption-saving decisions. Games and Economic Behavior 52: 460–92.

G. M. Becker , M. H. DeGroot , H. Morris and J. Marschak . 1963. Stochastic models of choice behavior. Behavioral Science 8: 4155.

K. C. Berridge 1996. Food reward: brain substrates of wanting and liking. Neuroscience and Biobehavioral Reviews 20: 125.

M. Bhatt and C. F. Camerer . 2005. Self-referential thinking and equilibrium as states of mind in games: fMRI evidence. Games and Economic Behavior 52: 424–59.

K. Binmore 2007a. Playing for real. A text on game theory. New York: Oxford University Press.

P. Bolton and M. Dewatripont . 2005. Contract Theory. Cambridge, MA: MIT Press.

F. D. Bowman , B. Caffo , S. S. Bassett and C. Kilts . 2008. A Bayesian hierarchical framework for spatial modeling of fMRI data. NeuroImage 39: 146–56.

S. G. Bronars 1987. The power of nonparametric tests of preference maximization. Econometrica 55: 693–8.

E. Bullmore , M. Brammer , S. C. R. Williams , S. Rabe-Hesketh , N. Janot , A. David , J. Mellers , R. Howard and P. Sham . 1995. Statistical methods of estimation and inference for functional MR image analysis. Magnetic Resonance in Medicine 35: 261–77.

C. F. Camerer and T.-H. Ho . 1994. Violations of the betweeness axiom and nonlinearity in probability. Journal of Risk and Uncertainty 8: 167–96.

C. Camerer 2008. The case for mindful economics. In Foundations of positive and normative economics, ed. A. Caplin and A. Schotter . New York: Oxford University Press.

C. Camerer , G. Loewenstein and D. Prelec . 2004. Neuroeconomics: why economics needs brains. Scandinavian Journal of Economics 106: 555–79.

C. Camerer , G. Loewenstein and D. Prelec . 2005. Neuroeconomics: how neuroscience can inform economics. Journal of Economic Literature 43: 964.

A. Caplin and A. Schotter , Andrew, eds. 2008. Foundations of positive and normative economics. New York: Oxford University Press.

P. V. S. Chandrasekhar , C. M. Capra , S. Moore , C. Noussair and G. Berns . 2008. Neurobiological regret and rejoice functions for aversive outcomes. NeuroImage 39: 1472–84.

J. D. Cohen 2005. The vulcanization of the human brain: A neural perspective on interactions between cognition and emotion. Journal of Economic Perspectives 19 (4): 324.

M. Coller and M. B. Williams . 1999. Eliciting individual discount rates. Experimental Economics 2: 107–27.

J. C. Cox 2004. How to identify trust and reciprocity. Games and Economic Behavior 46: 260–81.

W. R. Crum , L. D. Griffin , D. L. G. Hill and D. J. Hawkes . 2003. Zen and the art of medical image registration: correspondence, homology, and quality. NeuroImage 20: 1425–37.

A. S. Deaton 1974. The analysis of consumer demand in the United Kingdom, 1900–1970. Econometrica 42: 341–67.

D. DeQuervain , U. Fischbacher , V. Treyer , M. Schellhammer , U. Schnyder , A. Buck and E. Fehr . 2004. The neural basis of altruistic punishment. Science 305: 1254–8.

J. Dickhaut , K. McCabe , J. C. Nagode , A. Rustichini , K. Smith and J. V. Pardo . 2003. The impact of the certainty context on the process of choice. Proceedings of the National Academy of Sciences, USA 100 (6): 3536–41.

D. Friedman , G. W. Harrison and J. Salmon . 1984. The Informational Efficiency of Experimental Asset Markets. Journal of Political Economy 92: 349408.

H. L. Gallagher and C. D. Frith . 2003. Functional imaging of ‘Theory of Mind’. Trends in Cognitive Sciences 7: 7783.

G. Gigerenzer 1996. On narrow norms and vague heuristics: A reply to Kahneman and Tversky (1996). Psychological Review 103: 592–6.

K. J. Gilhooly and W. A. Falconer . 1974. Concrete and abstract terms and relations in testing a rule. Quarterly Journal of Experimental Psychology 26: 355–9.

J. K. Goeree , C. A. Holt and T. R. Palfrey . 2005. Regular quantal response equilibrium. Experimental Economics 8: 347–67.

D. M. Grether , C. R. Plott , D. B. Rowe , M. Sereno and J. M. Allman . 2007. Mental processes and strategic equilibration: An fMRI study of selling strategies in second price auctions. Experimental Economics 10: 105–22.

F. Gul and W. Pesendorfer . 2006. Random expected utility. Econometrica 74: 121–46.

F. Gul and W. Pesendorfer . 2008. The case for mindless economics. In Foundations of positive and normative economics, ed. A. Caplin and A. Schotter . New York: Oxford University Press.

P. A. Haile , A. Hortaçsu and G. Kosenok . 2008. On the empirical content of quantal response equilibria. American Economic Review 98: 180200.

W. T. Harbaugh , U. Mayr and D. R. Burghart . 2007. Neural responses to taxation and voluntary giving reveal motives for charitable donations. Science 316: 1622–5.

G. W. Harrison and J. A. List . 2004. Field experiments. Journal of Economic Literature 42: 1013–59.

G. W. Harrison and E. E. Rutström . 2008. Risk aversion in the laboratory. In Risk aversion in experiments, ed. J. C. Cox and G. W. Harrison . Bingley, UK: Emerald.

J. C. Harsanyi 1975. The tracing procedure: A Bayesian approach to defining a solution for n-person non-cooperative games. International Journal of Game Theory 4: 6194.

J. D. Hey 2005. Why we should not be silent about noise. Experimental Economics 8: 325–45.

J. D. Hey and C. Orme . 1994. Investigating generalizations of expected utility theory using experimental data. Econometrica 62: 1291–326.

M. Hsu , M. Bhatt , R. Adolphs , D. Tranel and C. F. Camerer . 2005. Neural systems responding to degrees of uncertainty in human decision-making. Science 310: 1680–3.

E. J. Johnson , C. F. Camerer , S. Sankar and T. T. Tymon . 2002. Detecting failures of backward induction: monitoring information search in sequential bargaining. Journal of Economic Theory 104: 1647.

P. N. Johnson-Laird , P. Legrenzi and M. Sonino Legrenzi . 1972. Reasoning and sense of reality. British Journal of Psychology 63: 394400.

L. S. Jones 2007. The ethics of transcranial magnetic stimulation. Science 315: 1663.

D. Kahneman and A. Tversky . 1979. Prospect theory: An analysis of decision under risk. Econometrica 47: 263–91.

D. Kahneman and A. Tversky . 1996. On the reality of cognitive illusions. Psychological Review 103: 582–91.

D. Knoch , A. Pascual-Leone , K. Meyer , V. Treyer and E. Fehr . 2006. Diminishing reciprocal fairness by disrupting the right prefontal cortex. Science 314: 829–32.

B. Knutson , A. Westdorp , E. Kaiser and D. Hommer . 2000. FMRI visualization of brain activity during a monetary incentive delay task. NeuroImage 12: 20–7.

M. Kosfeld , M. Heinrichs , P. Zak , U. Fischbacher and E. Fehr . 2005. Oxytocin increases trust in humans. Nature 435: 673–6.

W. J. Leland 1994. Generalized similarity judgements: An alternative explanation for choice anomalies. Journal of Risk and Uncertainty 9: 151–72.

T. Lohrenz , K. McCabe , C. F. Camerer and P. R. Montague . 2007. Neural signature of fictive learning signals in a sequential investment task. Proceedings of the National Academy of Sciences, USA 104: 9494–8.

G. Loomes 2005. Modelling the stochastic component of behavior in experiments: some issues for the interpretation of data. Experimental Economics 8: 301–23.

G. Loomes and R. Sugden . 1998. Testing different stochastic specifications of risky choice. Economica 65: 581–98.

D. Marr 1982. Vision: A computational investigation into the human representation and processing of visual information. New York: W. H. Freeman & Company.

D. Marr and T. Poggio . 1976. Cooperative computation of stereo disparity. Science 194: 283–7.

K. McCabe , D. Houser , L. Ryan , V. L. Smith and T. Trouard . 2001. A functional imaging study of cooperation in two-person reciprocal exchange. Proceedings of the National Academy of Sciences, USA 98: 11832–5.

S. M. McClure , D. I. Laibson , G. Loewenstein and J. D. Cohen . 2004. Separate neural systems value immediate and delayed monetary rewards. Science 306: 503–7.

S. M. McClure , K. M. Ericson , D. I. Laibson , G. Loewenstein and J. D. Cohen . 2007. Time discounting for primary rewards. Journal of Neuroscience 27: 5796–804.

T. M. McDaniel and E. E. Rutström . 2001. Decision making costs and problem solving performance. Experimental Economics 4: 145–61.

P. R. Montague and G. S. Berns . 2002. Neural economics and the biological substrates of valuation. Neuron 36: 265–85.

Q. Paris and M. R. Caputo . 2002. Comparative statics of money-goods specifications of the utility function. Journal of Economics (Zeitschrift für Nationalökonomie) 77: 5371.

J. W. Pratt 1964. Risk aversion in the small and in the large. Econometrica 32: 122–36.

S. Rabe-Hesketh , E. T. Bullmore and M. J. Brammer . 1997. The analysis of functional magnetic resonance images. Statistical Methods in Medical Research 6: 215–37.

J. K. Rilling , A. G. Sanfey , J. A. Aronson , L. E. Nystrom and J. D. Cohen . 2004. The neural correlates of theory of mind within interpersonal interactions. NeuroImage 22: 1694–703.

D. Ross 2005. Economic Theory and Cognitive Science: Microexplanation. Cambridge, MA: MIT Press.

A. Rubinstein 1988. Similarity and decision-making under risk (is there a utility theory resolution to the Allais paradox?) Journal of Economic Theory 46: 145–53.

A. Rubinstein 2007. Instinctive and cognitive reasoning: a study of response times. Economic Journal 117: 1243–59.

L. Samuelson 2005. Foundations of human sociality: a review essay. Journal of Economic Literature 43: 488–97.

P. Samuelson 1938. A note on the pure theory of consumer's behaviour. Economica 5: 6171.

A. G. Sanfey , J. K. Rilling , J. A. Aronson , L. E. Nystrom and J. D. Cohen . 2003. The neural basis of economic decision-making in the ultimatum game. Science 300: 1755–8.

H. A. Simon 1996. The sciences of the artificial, 3rd edn. Cambridge, MA: MIT Press.

V. L. Smith 1991. Rational choice: the contrast between economics and psychology. Journal of Political Economy 99: 877–97.

V. L. Smith 2003. Constructivist and ecological rationality in economics. American Economic Review 93: 465508.

C. Starmer 2000. Developments in non-expected utility theory: The hunt for a descriptive theory of choice under risk. Journal of Economic Literature 38: 332–82.

R. Sugden 2003. The logic of team reasoning. Philosophical Explorations 6: 165–81.

S. Sunder 2006. Economic theory: structural abstraction or behavioral reduction? History of Political Economy 38: 322–42.

D. J. Tisserand , J. C. Pruessner , E. J. Sanz Arigita , M. P. J. Boxtel , A. C. Evans , J. Jolles and H. B. M. Uylings . 2002. Regional frontal cortical volumes decrease differentially in aging: an MRI study to compare volumetric approaches and voxel-based morphometry. NeuroImage 17: 657–9.

A. Tversky 1969. Intransitivity of preferences. Psychological Review 76: 3148.

A. Tversky 1977. Features of similarity. Psychological Review 84: 327–52.

H. R. Varian 1985. Non-parametric analysis of optimizing behavior with measurement error. Journal of Econometrics 30: 445–58.

H. R. Varian 1988. Revealed preference with a subset of goods. Journal of Economic Theory 46: 179–85.

P. C. Wason and D. Shapiro . 1971. Natural and contrived experience in a reasoning problem. Quarterly Journal of Experimental Psychology 23: 6371.

N. M. White and S. Gaskin . 2006. Dorsal hippocampus function in learning and expressing a spatial discrimination. Learning and Memory 13: 119–22.

N. T. Wilcox 1993. Lottery choice: incentives, complexity and decision time. Economic Journal 103: 1397–417.

N. T. Wilcox 2006. Theories of learning in games and heterogeneity bias. Econometrica 74: 1271–92.

N. T. Wilcox 2008a. Stochastic models for binary discrete choice under risk: a critical primer and econometric comparison. In Risk Aversion in Experiments, ed. J. Cox and G. W. Harrison . Bingley, UK: Emerald.

D. K. Wong , L. Grosenick , E. T. Uy , M. P. Guimaraes , C. G. Carvalhaes , P. Desain and P. Suppes . 2008. Quantifying inter-subject agreement in brain-imaging analyses. NeuroImage 39: 1051–63.

P. J. Zak , R. Kurzban and W. T. Matzner . 2005. Oxytocin is associated with human trustworthiness. Hormones and Behavior 48: 522–7.

S. Dehaene and J.-P. Changeux . 1997. A hierarchical neuronal network for planning behavior. Proceedings of the National Academy of Sciences USA 94: 1329313298.

S. Dehaene , E. Spelke, P. Pinel, R. Stanescu and S. Tsivkin . 1999. Sources of mathematical thinking: Behavioral and brain-imaging evidence. Science 284: 970974.

Recommend this journal

Email your librarian or administrator to recommend adding this journal to your organisation's collection.

Economics & Philosophy
  • ISSN: 0266-2671
  • EISSN: 1474-0028
  • URL: /core/journals/economics-and-philosophy
Please enter your name
Please enter a valid email address
Who would you like to send this to? *
×