This toolset examines how the inner workings of the brain influence our economic and financial decisions.
From WIkipedia: "Neuroeconomics is an interdisciplinary field that seeks to explain human decision making, the ability to process multiple alternatives and to choose an optimal course of action. It studies how economic behavior can shape our understanding of the brain, and how neuroscientific discoveries can constrain and guide models of economics. It combines research methods from neuroscience, experimental and behavioral economics, and cognitive and social psychology. " http://en.wikipedia.org/wiki/Neuroeconomics My favorite definition comes from Harvard University's David Laibson's Third neuroeconomics lecture: "Definition: Neuroeconomics is the study of the biological microfoundations of economic cognition" http://isites.harvard.edu/fs/docs/icb.topic951277.files/Neuroeconomics%20Lecture%203.pdf http://isites.harvard.edu/fs/docs/icb.topic951277.files/Neuroeconomics%20Lecture%203.pdfEdit Remove Move
Some of the early work in the field (2008) came from Drazen Prelec at MIT. A pioneer in a "dangerously hot research area," Drazen Prelec peers into the human brain while it makes decisions. In his corner of the new field of neuroeconomics, Prelec uses a functional magnetic resonance imaging (fMRI) machine to scan minds pondering the pros and cons of purchasing and selling products like Godiva chocolate and flash drives. This is a bit more at marketing than finance/economics, but very close.Edit Remove Move
An short piece by Chew Soo Hong and Zhong Sogfa of the National University of Singapore introduces the idea that some people may be born to take risks.Edit Remove Move
Really good. Long, but good. Watch it for homework. "Over the past decade substantial progress has been made towards understanding human decision-making. Recent work has identified the mechanisms we use to assign value to the options with which we are faced, be they food, money, water, or social interactions."Edit Remove Move
There is no doubt that Paul Zak's research on the hormone Oxytocin has been the most popularly accepted work in the field. Here he is describing some of the findings of him and and others. "What drives our desire to behave morally? Neuroeconomist Paul Zak shows why he believes oxytocin (he calls it "the moral molecule") is responsible for trust, empathy and other feelings that help build a stable society."Edit Remove Move
We all know some people take more risks than others. Risk taking is good in some circles (Entrepreneurs and explorers are exceptions examples), but can people become addicted to risk taking? Are there predictable differences between subsets of the population when it comes to risk taking?
Not all risk takers are equal
"...in general, men take more chances in their financial lives than women do.....They found that higher levels of testosterone in women equaled greater risk-taking behaviors. If a woman's level of testosterone was similar to a man's, the gap in risk taking disappeared."However, this testosterone hypothesis is not the only explanation. The full story is also tied to the question of whether people can become addicted to risk. The answer to this (yes) is also grounded in our hormones: Successful risk taking releases dopamine into the blood. Dopamine a "pleasure hormone" is what leads to addiction (see Time) . But it is not quite that easy for just like recreational drugs some become addicted while others do not.
"Risk-taking, by definition, defies logic. Reason can't explain why people do unpredictable things - like betting on blackjack or jumping out of planes - for little or, sometimes, no reward at all. There's the thrill, of course, but those brief moments of ecstasy aren't enough to keep most risk takers coming back for more - which they do, again and again, like addicts."Edit Remove Move
Why are some people trustworthy while others cheat and lie, some generous and others coldhearted louts? Part of the answer may lie in the hormone oxytocin. In an excerpt from The Moral Molecule, Paul J. Zak writes about the new science of morality-and how it could be used to create a more virtuous society.Edit Remove Move
great paperEdit Remove Move