American Economic Association Nashville, TN 0022-8282 Journal of Economic Literature http://www.aeaweb.org/journal.html 43 1 March 2005 http://www.aeaweb.org/articles/issue_detail.php?journal=JEL&volume=43&issue=1&issue_date=March 2005 Journal Article JEL Classification System 331 342 http://www.aeaweb.org/articles/article_detail.php?journal=JEL&volume=43&issue=1&article=7&issue_date=March 2005 10.1257/0022051053737807 American Economic Association Nashville, TN 0022-8282 Journal of Economic Literature http://www.aeaweb.org/journal.html 43 1 March 2005 http://www.aeaweb.org/articles/issue_detail.php?journal=JEL&volume=43&issue=1&issue_date=March 2005 Journal Article Neuroeconomics: How Neuroscience Can Inform Economics ColinCamerer GeorgeLoewenstein DrazenPrelec 9 64 Neuroeconomics uses knowledge about brain mechanisms to inform economic analysis, and roots economics in biology. It opens up the "black box" of the brain, much as organizational economics adds detail to the theory of the firm. Neuroscientists use many tools— including brain imaging, behavior of patients with localized brain lesions, animal behavior, and recording single neuron activity. The key insight for economics is that the brain is composed of multiple systems which interact. Controlled systems ("executive function") interrupt automatic ones. Emotions and cognition both guide decisions. Just as prices and allocations emerge from the interaction of two processes—supply and demand— individual decisions can be modeled as the result of two (or more) processes interacting. Indeed, "dual-process" models of this sort are better rooted in neuroscientific fact, and more empirically accurate, than single-process models (such as utility-maximization). We discuss how brain evidence complicates standard assumptions about basic preference, to include homeostasis and other kinds of state-dependence. We also discuss applications to intertemporal choice, risk and decision making, and game theory. Intertemporal choice appears to be domain-specific and heavily influenced by emotion. The simplified ß-d of quasi-hyperbolic discounting is supported by activation in distinct regions of limbic and cortical systems. In risky decision, imaging data tentatively support the idea that gains and losses are coded separately, and that ambiguity is distinct from risk, because it activates fear and discomfort regions. (Ironically, lesion patients who do not receive fear signals in prefrontal cortex are "rationally" neutral toward ambiguity.) Game theory studies show the effect of brain regions implicated in "theory of mind", correlates of strategic skill, and effects of hormones and other biological variables. Finally, economics can contribute to neuroscience because simple rational-choice models are useful for understanding highly-evolved behavior like motor actions that earn rewards, and Bayesian integration of sensorimotor information. http://www.aeaweb.org/articles/article_detail.php?journal=JEL&volume=43&issue=1&article=1&issue_date=March 2005 10.1257/0022051053737843 American Economic Association Nashville, TN 0022-8282 Journal of Economic Literature http://www.aeaweb.org/journal.html 43 1 March 2005 http://www.aeaweb.org/articles/issue_detail.php?journal=JEL&volume=43&issue=1&issue_date=March 2005 Journal Article Economic Theory and Experimental Economics LarrySamuelson 65 107 This paper explores the questions of how economic theory can be used to design and interpret experiments and how experimental results can be used to construct and interpret economic theories. The relationship between economic theory and experiments is modeled and illustrated with examples from both theoretical and experimental work. The emphasis is on combing theory and experiment to the benefit of both. http://www.aeaweb.org/articles/article_detail.php?journal=JEL&volume=43&issue=1&article=2&issue_date=March 2005 10.1257/0022051053737816 American Economic Association Nashville, TN 0022-8282 Journal of Economic Literature http://www.aeaweb.org/journal.html 43 1 March 2005 http://www.aeaweb.org/articles/issue_detail.php?journal=JEL&volume=43&issue=1&issue_date=March 2005 Journal Article Development Joseph A.Schumpeter 108 120 The present article introduces Development, a new, unpublished and hitherto unknown article by Joseph A. Schumpeter from 1932. Development is remarkable because it significantly adds to Schumpeter's known works on a number of issues that were central to his theory of economic development. Development shows that Schumpeter considered the explanation of novelty as the most important unsolved scientific problem. Schumpeter doubts the explanatory value of entrepreneurship and indicates that theoretical advances might be forthcoming that can help a better understanding of the social dynamics which gives rise to novelty. http://www.aeaweb.org/articles/article_detail.php?journal=JEL&volume=43&issue=1&article=3&issue_date=March 2005 10.1257/0022051053737825 American Economic Association Nashville, TN 0022-8282 Journal of Economic Literature http://www.aeaweb.org/journal.html 43 1 March 2005 http://www.aeaweb.org/articles/issue_detail.php?journal=JEL&volume=43&issue=1&issue_date=March 2005 Journal Article A Review of Interest and Prices: Foundations of a Theory of Monetary Policy by Michael Woodford Edward J.Green 121 134 This is a review article of Interests and Prices: Foundations of a Theory of Monetary Policy (Princeton University Press 2003) by Michael Woodford. http://www.aeaweb.org/articles/article_detail.php?journal=JEL&volume=43&issue=1&article=4&issue_date=March 2005 10.1257/0022051053737799 American Economic Association Nashville, TN 0022-8282 Journal of Economic Literature http://www.aeaweb.org/journal.html 43 1 March 2005 http://www.aeaweb.org/articles/issue_detail.php?journal=JEL&volume=43&issue=1&issue_date=March 2005 Journal Article Book Reviews 135 196 http://www.aeaweb.org/articles/article_detail.php?journal=JEL&volume=43&issue=1&article=5&issue_date=March 2005 10.1257/0022051053737834 American Economic Association Nashville, TN 0022-8282 Journal of Economic Literature http://www.aeaweb.org/journal.html 43 1 March 2005 http://www.aeaweb.org/articles/issue_detail.php?journal=JEL&volume=43&issue=1&issue_date=March 2005 Journal Article Annotated Listing of New Books 197 330 http://www.aeaweb.org/articles/article_detail.php?journal=JEL&volume=43&issue=1&article=6&issue_date=March 2005 10.1257/0022051053737852