Hostname: page-component-586b7cd67f-2brh9 Total loading time: 0 Render date: 2024-11-23T21:05:44.515Z Has data issue: false hasContentIssue false

NEUROECONOMICS AND THE ECONOMIC SCIENCES

Published online by Cambridge University Press:  01 November 2008

Kevin A. McCabe*
Affiliation:
George Mason University

Abstract

Neuroeconomics is the newest of the economic sciences with a focus on how the embodied human brain interacts with its institutional and social environment to make economic decisions. This paper presents an overview of neuroeconomics methods and reviews a number of results in this emerging field of study.

Type
Essay
Copyright
Copyright © Cambridge University Press 2008

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

REFERENCES

Balleine, B. and Dickinson, A.. 1998. Goal-directed instrumental action: contingency and incentive learning and their cortical substrates. Neuropharmacology 37: 407–19.CrossRefGoogle ScholarPubMed
Berg, J., Dickhaut, J. and McCabe, K.. 1995. Trust, reciprocity, and social history. Games and Economic Behavior 10: 122–42.CrossRefGoogle Scholar
Botvinick, C. S. C. and Cohen, J. D.. 2000. Anterior cingulate and prefrontal cortex: who's in control? Nature Neuroscience 3: 421–3.Google Scholar
Camerer, C., Loewenstein, G. and Prelec, D.. 2005. Neuroeconomics: How neuroscience can inform economics. Journal of Economic Literature 2005: XLIII.Google Scholar
Cherry, T., Frykblom, P. and Shogren, J.. 2002. Hardnose the Dictator. American Economic Review 92: 1218–21.CrossRefGoogle Scholar
Coltheart, M. 2004. Brain imaging, connectionism, and cognitive neuropsychology. Cognitive Neuropsychology 21: 21–5.CrossRefGoogle ScholarPubMed
Connover, K. and Shizgal, P.. 2005. Employing labor-supply theory to measure the reward value of electrical brain stimulation. Games and Economic Behavior 52: 283304.CrossRefGoogle Scholar
Forsythe, R., Horowitz, J., Eugene Savin, N. and Sefton, M.. 1994. Replicability, fairness and pay in experiments with simple bargaining games. Games and Economic Behavior 6: 347–69.CrossRefGoogle Scholar
Frith, C. D. and Frith, U.. 1999. Interacting minds – a biological basis. Science 286: 1692–5.CrossRefGoogle ScholarPubMed
Gazzaniga, M., Ivry, R. and Mangun, G. 2002. Cognitive neuroscience, 2nd Edn. New York: W. W. Norton & Company.Google Scholar
Gigerenzer, G. and Selten, R.. 2001. Bounded rationality: The adaptive toolbox. Cambridge, MA: MIT Press.Google Scholar
Glimcher, P. W. and Rustichini, A.. 2004. Neuroeconomics: The concilience of brain and decision. Science 306: 447–52.CrossRefGoogle Scholar
Gode, D. and Sunder, S.. 1993. Allocative efficiency of markets with zero intelligence traders: market as a partial substitute for individual rationality. Journal of Political Economy 101: 119–37.CrossRefGoogle Scholar
Gul, F. and Pesendorfer, W.. 2005. The case for mindless economics. Working Paper. Princeton, NJ: Princeton University.Google Scholar
GuthS., R. Schmittberger S., R. Schmittberger and Schwarze, B.. 1982. An experimental analysis of ultimatum bargaining. Journal of Economic Behavior and Organization 3: 367–88.CrossRefGoogle Scholar
Harley, T. 2004. Does cognitive neuropsychology have a future. Cognitive Neuropsychology 21: 316.CrossRefGoogle ScholarPubMed
Henson, R. A. 2005. What can functional neuroimaging tell the experimental psychologist? Quarterly Journal of Experimental Psychology 58A: 193233.CrossRefGoogle Scholar
Henson, R. N. A., Rugg, M. D., Shallice, T., Josephs, O. & Dolan, R. 1999. Recollection and familiarity in recognition memory: An event-related fMRI study. Journal of Neuroscience 19: 3962–72.CrossRefGoogle Scholar
Hoffman, E., McCabe, K. and Smith, V.. 1996. Social distance and other-regarding behavior. American Economic Review 86: 653–60.Google Scholar
Hoffman, E., McCabe, K., Shachat, K. and Smith, V.. 1994. Preferences, property rights, and anonymity in bargaining games. Games and Economic Behavior 7: 346–80.CrossRefGoogle Scholar
Holland, J. H., Holyoak, K. J., Nisbett, R. E., Thagard, R. E.. 1986. Induction: Processes of inference, learning, and discovery. Cambridge, MA: MIT Press.Google Scholar
Houser, D. 2008. Experimental neuroeconomics and non-cooperative games. In Handbook of neuroeconomics, ed. Glimcher, P. W., Camerer, C. F., Fehr, E. and Poldrack, R. A.. Academic Press.CrossRefGoogle Scholar
Houser, D., Schunk, D. and Xiao, E.. 2007. Combining brain and behavioral data to improve econometric policy analysis. Analyse & Kritik 29: 8696.CrossRefGoogle Scholar
Huetell, S., Song, A. and McCarthy, G.. 2004. Functional magnetic resonance imaging. Sunderland, MA: Sinauer Associates.Google Scholar
Kable, J. and Glimcher, P.. 2007. The neural correlates of subjective value during intertemporal choice. Nature Neuroscience 10: 1625–33.CrossRefGoogle ScholarPubMed
King-Casa, B., Tomlin, D., Anen, C., Camerer, C., Quartz, S. and Read, P. Montague. 2005. Getting to know you: Reputation and trust in a two-person economic exchange. Science 308: 7883.CrossRefGoogle Scholar
Knoch, D., Pascual-Leone, A., Meyer, K., Treyer, V. and Fehr, E.. 2006. Diminishing reciprocal fairness by disrupting the right prefrontal cortex. Science 314: 829–32.CrossRefGoogle ScholarPubMed
Knutson, B., Westdorp, A., Kaiser, E. and Hommer, D.. 2000. FMRI visualization of brain activity during a monetary incentive delay task. NeuroImage 12: 20–7.CrossRefGoogle ScholarPubMed
Knutson, B., Adams, C. M., Fong, G. W. and Hommer, D.. 2001a. Anticipation of increasing monetary reward selectively recruits nucleus accumbens. Journal of Neuroscience 21 (RC159): 15.CrossRefGoogle ScholarPubMed
Knutson, B., Fong, G. W., Adams, C. M., Varner, J. L. and Hommer, D.. 2001b. Dissociation of reward anticipation and outcome with event-related FMRI. NeuroReport 12: 3683–7.CrossRefGoogle ScholarPubMed
Kosfeld, M., Heinreichs, M., Zak, P., Fishbacher, U. and Fehr, E.. 2005. Oxytocin increases trust in humans. Nature 435: 673–6.CrossRefGoogle ScholarPubMed
Krueger, F., McCabe, K., Moll, J., Kriegeskorte, N., Zahn, R., Strenziok, M., Heinecke, A. and Grafman, J.. 2007. Neural correlates of trust. Proceedings of the National Academy of Sciences, USA 104: 20084–9.Google Scholar
Kuhnen, C. and Knutson, B.. 2005. The neural basis of financial risk taking. Neuron 47: 763–70.CrossRefGoogle ScholarPubMed
LeDoux, J. 2002. Synaptic self. New York: Penguin Books.Google Scholar
Ledyard, J. 1986. The scope of the hypothesis of Bayesian equilibrium. Journal of Economic Theory 39: 5982.CrossRefGoogle Scholar
Logothetis, N., Pauls, J., Augath, M., Trinath, T. and Oeltermann, A.. 2001. Neurophysiological investigation of the basis of the fMRI signal. Nature 412: 128–30.CrossRefGoogle ScholarPubMed
Lohrenz, T., McCabe, K., Camerer, C. and Montague, P. Read. 2007. Neural signature of fictive learning signals in a sequential investment task. Proceedings of the National Academy of Sciences, USA 104: 9493–8.CrossRefGoogle Scholar
Maynard-Smith, J. 1982. The theory of games and the evolution of animal conflicts. Journal of Theoretical Biology 47: 209–21.CrossRefGoogle Scholar
McCabe, K. 2002. Neuroeconomics. In Encyclopedia of Cognitive Science, ed. Nadel, L.. London: Nature Publishing Group.Google Scholar
McCabe, K. and Smith, V.. 2000. A two person trust game played by naïve and sophisticated subjects. Proceedings of the National Academy of Sciences, USA 97: 3777–81.Google Scholar
McCabe, K., Rigdon, M. and Smith, V.. 2003. Positive reciprocity and intentions in trust games. Journal of Economic Behavior and Organizations 52: 267–75.CrossRefGoogle Scholar
McCabe, K., Houser, D., Ryan, L., Smith, V. and Trouard, T.. 2001. A functional imaging study of ‘Theory of Mind’ in two-person reciprocal exchange. Proceedings of the National Academy of Sciences, USA 98: 11832–5.CrossRefGoogle ScholarPubMed
McClure, S., Li, J., Tomlin, D., Cypert, K., Montague, L. and Montague, R.. 2004a. Neural correlates of behavioral preference for culturally familiar drinks. Neuron 44: 379–87.CrossRefGoogle ScholarPubMed
McClure, S., Laibson, D., Lowenstein, G. and Cohen, J.. 2004b. Separate neural systems value immediate and delayed monetary rewards. Science 306: 503–7.CrossRefGoogle ScholarPubMed
Montague, R. 2006. Why choose this book? New York: Dutton, Penguin Group.Google Scholar
NIDA, NIMH, NIDDK, sponsors. 2002. Special review issue on reward and decision. Neuron 36: 2.Google Scholar
North, D. 2005. Understanding the process of economic change. Princeton, NJ: Princeton University Press.CrossRefGoogle Scholar
O'Doherty, J., Dayan, P., Schultz, J., Deichmann, R., Friston, K. and Dolan, R. J.. 2004. Dissociable roles of ventral and dorsal striatum in instrumental conditioning. Science 304: 452–4.CrossRefGoogle ScholarPubMed
Preuschoff, K., Bossaerts, P. and Quartz, S.. 2006. Heural differentiation of expected reward and risk in human subcortical structures. Neuron 51: 381–90.CrossRefGoogle ScholarPubMed
Sanfey, A., Rilling, J., Aronson, J., Nystrom, L. and Cohen, J.. 2003. The neural basis of economic decision making in the Ultimatum Game. Science 300: 17551758.CrossRefGoogle ScholarPubMed
Schultz, W. 2000. Multiple reward signals in the brain. Nature Reviews Neuroscience 1: 189207.CrossRefGoogle ScholarPubMed
Schultz, W., Dayan, P. and Montague, R.. 1997. A neural substrate of prediction and reward. Science 275: 1593–9.CrossRefGoogle ScholarPubMed
Simon, H. A. 1957. Models of man. New York: Wiley.Google Scholar
Singer, T. 2008. Brain signatures of social decision making. In Better Than Conscious? Decision Making, the Human Mind, and Implications For Institutions, ed. Engel, C. and Singer, W.. Cambridge, MA: MIT Press.Google Scholar
Smith, V. 1976. Experimental economics induced value theory. American Economic Review 66: 274–9.Google Scholar
Smith, V. 1982. Microeconomic systems as an experimental science. American Economic Review 72: 923–55.Google Scholar
Smith, V., Suchaneck, G. and Williams, A.. 1988. Bubbles crashes and endogenous expectations in experimental spot asset markets. Econometrica 56: 1119–51.CrossRefGoogle Scholar
Smith, V. 2008. Rationality in economics: Constructivist and ecological forms. New York: Cambridge University Press.Google Scholar
Spitzer, M., Fischbacher, U., Herrnberger, B., Gron, G. and Fehr, E.. 2007. The neural signature of social norm compliance. Neuron 56: 185–96.CrossRefGoogle ScholarPubMed
Sutton, R. and Barto, A.. 1998. Reinforcement learning. Cambridge, MA: MIT Press.Google Scholar
Thorndyke, E. L. 1911. Animal intelligence: Experimental studies. New York: Macmillan.Google Scholar
Weibull, J. 1996. Evolutionary game theory, 2nd Edn. Cambridge, MA: MIT Press.Google Scholar
White, N. M. 1989. A functional hypothesis concerning the striatal matrix and patches: mediation of S-R memory and reward. Life Science 45: 1943–57.CrossRefGoogle ScholarPubMed
Xiao, E. and Houser, D.. 2005. Emotion expression in human punishment behavior. Proceedings of the National Academy of Sciences, USA 102: 7398–401.CrossRefGoogle Scholar