A Review Essay about Foundations of Neuroeconomic Analysis by Paul Glimcher
Camerer, Colin F. 2013. "A Review Essay about Foundations of Neuroeconomic Analysis by Paul Glimcher."
Journal of Economic Literature,
Neuroeconomics aims to discover mechanisms of economic decision, and express them
mathematically, to predict observed choice. While the contents of neuroeconomic models
and evidence are obviously different than in traditional economics, (some of the) goals
are identical: to explain and predict choice, the effects of comparative statics, and perhaps
make interesting new welfare judgments that are defensible. To this end, Paul Glimcher's
important book carefully describes how economics, psychological, and neural levels of
explanation can be linked (a structure which has been successful in visual neuroscience).
As Glimcher shows, the neural evidence is quite strong for a process of learning valuations
through prediction error, and a simple model of neural valuation and comparison that
corresponds to random utility (though subject to normalization, which produces menu
effects). There is also rapidly growing evidence for more complicated constructs in
behavioral economics, including prospect theory's account of risky choice, hyperbolic
time discounting, level-k models of games, and social preferences corresponding
to internal reward based on what happens to other agents.
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Camerer, Colin F. (CA Institute of Technology)
A12: Relation of Economics to Other Disciplines
D12: Consumer Economics: Empirical Analysis