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Journal of Economic Perspectives: Vol. 25 No. 4 (Fall 2011)

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Neuroeconomic Foundations of Economic Choice--Recent Advances

Article Citation

Fehr, Ernst, and Antonio Rangel. 2011. "Neuroeconomic Foundations of Economic Choice--Recent Advances." Journal of Economic Perspectives, 25(4): 3-30.

DOI: 10.1257/jep.25.4.3

Abstract

Neuroeconomics combines methods and theories from neuroscience psychology, economics, and computer science in an effort to produce detailed computational and neurobiological accounts of the decision-making process that can serve as a common foundation for understanding human behavior across the natural and social sciences. Because neuroeconomics is a young discipline, a sufficiently sound structural model of how the brain makes choices is not yet available. However, the contours of such a computational model are beginning to arise; and, given the rapid progress, there is reason to be hopeful that the field will eventually put together a satisfactory structural model. This paper has two goals: First, we provide an overview of what has been learned about how the brain makes choices in two types of situations: simple choices among small numbers of familiar stimuli (like choosing between an apple or an orange), and more complex choices involving tradeoffs between immediate and future consequences (like eating a healthy apple or a less-healthy chocolate cake). Second, we show that, even at this early stage, insights with important implications for economics have already been gained.

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Authors

Fehr, Ernst (U Zurich)
Rangel, Antonio (CA Institute of Technology)

JEL Classifications

D87: Neuroeconomics

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