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Brocas, Isabelle, and
Juan D. Carrillo. 2008. "The Brain as a Hierarchical Organization."
,
98(4): 1312-46.
Show Article Details
DOI: 10.1257/aer.98.4.1312
Abstract:Based on recent neuroscience evidence, we model the brain as a dual-system
organization subject to three conflicts: asymmetric information, temporal horizon,
and incentive salience. Under the first and second conflicts, we show that
the uninformed system imposes a positive link between consumption and labor
at every period. Furthermore, decreasing impatience endogenously emerges
as a consequence of these two conflicts. Under the first and third conflicts, it
becomes optimal to set a consumption cap. Finally, we discuss the behavioral
implications of these rules for choice bracketing and expense tracking, and for
consumption over the life cycle. (JEL D11, D74, D82, D87, D91)
Authors:
Brocas, Isabelle (U Southern CA, Los Angeles)
Carrillo, Juan D. (U Southern CA, Los Angeles)
JEL Classifications:
D11: Consumer Economics: Theory
D74: Conflict; Conflict Resolution; Alliances
D82: Asymmetric and Private Information
D87: Neuroeconomics
D91: Intertemporal Consumer Choice; Life Cycle Models and Saving
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