Neuroeconomics is an interdisciplinary field that seeks to explain human decision-making, the ability to process multiple alternatives and to follow through on a plan of action. It studies how economic behavior can shape our understanding of the brain, and how neuroscientific discoveries can guide models of economics. It combines research from neuroscience, experimental and behavioral economics, with cognitive and social psychology. As research into decision-making behavior becomes increasingly computational, it has also incorporated new approaches from theoretical biology, computer science, and mathematics. Neuroeconomics studies decision-making by using a combination of tools from these fields so as to avoid the shortcomings that arise from a single-perspective approach. In mainstream economics, expected utility (EU) and the concept of rational agents are still being used. Neuroscience has the potential to reduce the reliance on this flawed assumption by inferring what emotions, habits, biases, heuristics and environmental factors contribute to individual, and societal preferences. Economists can thereby make more accurate predictions of human behavior in their models. Behavioral economics was the first subfield to emerge to account for these anomalies by integrating social and cognitive factors in understanding economic decisions. Neuroeconomics adds another layer by using neuroscience and psychology to understand the root of decision-making. This involves researching what occurs within the brain when making economic decisions. The economic decisions researched can cover diverse circumstances such as buying a first home, voting in an election, choosing to marry a partner or go on a diet. Using tools from various fields, neuroeconomics works toward an integrated account of economic decision-making.
History In 1989, Paul Glimcher joined the Center for Neural Science at NYU. Initial forays into neuroeconomic topics occurred in the late 1990s thanks, in part, to the rising prevalence of cognitive neuroscience research. Improvements in brain imaging technology suddenly allowed for crossover between behavioral and neurobiological enquiry. At the same time, critical tension was building between neoclassical and behavioral schools of economics seeking to produce superior predictive models of human behavior. Behavioral economists, in particular, sought to challenge neo-classicists by looking for alternative computational and psychological processes that validated their counter-findings of irrational choice. These converging trends set the stage for the sub-discipline of neuroeconomics to emerge, with varying and complementary motivations from each parent discipline. Behavioral economists and cognitive psychologists looked towards functional brain imaging to experiment and develop their alternative theories of decision-making. While groups of physiologists and neuroscientists looked towards economics to develop their algorithmic models of neural hardware pertaining to choice. This split approach characterised the formation of neuroeconomics as an academic pursuit - not without criticism however. Numerous neurobiologists claimed that attempting to synchronise complex models of economics to real human and animal behavior would be futile. Neoclassical economists also argued that this merge would be unlikely to improve the predictive power of the existing revealed preference theory. Despite the early criticisms, neuroeconomics grew rapidly from its inception in the late 1990s through to the 2000s. Leading many more scholars from father fields of economics, neuroscience and psychology to take notice of the possibilities of such interdisciplinary collaboration. Meetings between scholars and early researchers in neuroeconomics began to take place through the early 2000s. Important among them was a meeting that took place during 2002 at Princeton University. Organized by neuroscientist Jonathan Cohen and economist Christina Paxson, the Princeton meeting gained significant traction for the field and is often credited as the formative beginning of the present-day Society for Neuroeconomics. The subsequent momentum continued throughout the decade of the 2000s in which research was steadily increasing and the number of publications containing the words "decision making" and "brain" rose impressively. A critical point in 2008 was reached when the first edition of Neuroeconomics: Decision Making and the Brain was published. This marked a watershed moment for the field as it accumulated the growing wealth of research into a widely accessible textbook. The success of this publication sharply increased the visibility of Neuroeconomics and helped affirm its place in economic teachings worldwide.
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