Neuro-Economics. A fascinating, burgeoning field of study that will ultimately change the understanding of human actions worldwide.
Modern economics (and much of sociology and political science) works under the framework of “rational choice theory.” Economic models are built on the assumption that humans balance costs against benefits and arrive at a conclusion (leading to an action) that maximizes personal advantage. Ideally, humans make decisions based on utility maximizing analysis, the same way a computer would analyze different options and select the utility maximizing action.
But there’s a major flaw to this theory. The human brain DOES NOT make decisions the same way as a computer. The human brain is wired, based on millions of years of evolution, to feel hunger, attraction, excitement, etc. and to act on these feelings. Dopamine, oxytocin, serotonin are the players in this never-ending game of choice.
Let’s look at a quick trip to the market. There are thousands of items to select and we make decisions based on hundreds of criteria. Hence, there are literally billions of different options. If a comparison of every two products takes .5 seconds for a computer, it would still take thousands of years for a computer to simply process the equation and come up with the utility maximizing bundles.
Yet our brain *feels* and makes the decision in a split second. Damn son!!
This same process holds true for investment, friendship, attraction, etc. Chemicals suggest we act certain ways. Higher level awareness and morality play a role too.
In this blog, I will be bringing you the most up-to-date in Neuroeconomics. I will include abstracts, articles, videos, and anything that may help you (and society) understand a bit more about our actions. If you’re as smart as I know you are, you may want to take the research and its conclusions and apply it to your own life. It’s science, after all!
Enjoy the journey!