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

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

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.

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

D87: Neuroeconomics