Chapter 3

Neuroeconomics: Exploring the Brain for Economic Analysis

In This Chapter

arrow Understanding the role of neuroeconomics in behavioral economics

arrow Looking at how the brain affects economics

arrow Acknowledging the importance of emotion in decision making

arrow Recognizing what the brain can’t do

arrow Looking at what brain science tells us about behavioral economics

Conventional economics focuses on the choices people make. Behavioral economics is concerned with the decision-making process and the choices people make, paying special attention to the realism of simplifying assumptions (the bare-bones assumptions of economic models; see Chapter 2 for details).

In the past, neither approach has paid much attention to how the brain helps us understand decision making. The focus has mainly been on what researchers can see, on what’s tangible. Increasingly, behavioral economists are examining not only how the brain is structured but also how the brain works as an additional tool to help understand people’s ...

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