A presentation of neuroeconomics

1. Neuroeconomics:
A science is born
Benoit Hardy-Vallée
Department of Philosophy
University of Waterloo
http://bhv.direct.to
Benoithv@gmail.com

2. Neuroeconomics?
• The study of the neural mechanisms of
decision-making and their economic
significance
• Concept
• Word
• Paradigm/research program

3. A concept
• Definition: The study of the neural
mechanisms of decision-making and
their economic significance.
• Value (economics) and reward
(neuroscience)

4. – "an emerging transdisciplinary field that uses
neuroscientific measurement techniques to
identify the neural substrates associated with
economic decisions” (Zak, 2004, p. 1737)
– “Economics, psychology and neuroscience are
converging today in to a single unified discipline
with the ultimate aim of providing a single,
general theory of human behavior. (…) The goal
of this discipline is thus to understand the
processes that connect sensation and action by
revealing the neurobiological mechanisms by
which decisions are made". (Glimcher &
Rustichini, 2004, p. 447)

5. A brief history
• Prehistory: (Hayek, 1952) “The
Sensory Order” : how the sensory
order (mind) leads to social order
(society)
• Late Antiquity: Connectionism,
Artificial Neural Networks (‘90s)
• Renaissance: (Damasio, 1994;
Damasio et al., 1996; Shizgal, 1997)
• Modern times: (Platt & Glimcher,
1999),(McCabe et al., 2001)
(Glimcher, 2003a)

6. The paradigm (I) Social development
• Conferences:
– Neurobehavioral economics (Carnegie-Mellon University, 1997)
– Neural economics (Princeton University, 2000)
– Neuroeconomics (University of Minnesota, 2002)
– NeuroPsychoEconomics Conference (Muenster, Germany, 2005)
• Encyclopedia entries:
– McCabe, Kevin, 2003, "Neuroeconomics," Encyclopedia of
Cognitive Science.
• Book: Glimcher book (2003)

7. • Societies:
– The Society For
Neuroeconomics
(incorporated in 2005)
– Association for
NeuroPsychoEconomics
(2004)
• Journals:
– NeuroPsychoEconomics,
ISSN 1861-4523 (2006)
– Games and Economic
Behavior, Volume 52, Issue
2, (2005) Special Issue on
Neuroeconomics
– Brain Research Bulletin,
Volume 67, Issue 5, (2005)
– Neuron, Special Review
Issue on Reward and
Decision, (2002)
• Research Labs:
– Center for the Study of
Neuroeconomics, George
Mason University (2004)
– Stanford Necon Lab (2004)
– Camerer Lab, Caltech
– Center for the Study of
Neuroeconomics (P.J. Zak)
– Duke Center for
Neuroeconomic Studies
– Glimcher Lab (1994)

8. The paradigm (II):
Conceptual development
• Economics:
• The “science which studies human
behavior as a relationship between ends
and scarce means which have
alternative uses” (Robbins, 1932).
• Bioeconomics
• Experimental/behavior
al/cognitive economics
• Ethology/behavioral
ecology
• Behavioral & cognitive
psychology
• Neuroscience
• Computer science
• Business/marketing

9. First neuroeconomics
experiments
• Decision theory:
– Platt, M. L., & Glimcher, P. W. (1999). Neural
correlates of decision variables in parietal cortex.
Nature, 400(6741), 238.
• Game theory
– McCabe, K., Houser, D., Ryan, L., Smith, V., &
Trouard, T. (2001). A functional imaging study of
cooperation in two-person reciprocal exchange.
PNAS, 98(20), 11832-11835.

10. encode the desirabilities of making particular movements.

11. • LIP Firing Rate
Varies with
Desirability during
Instructed Trials
• LIP Firing Rate
Correlated with
Dynamic Estimate
of Relative
Subjective
Desirability
QuickTime™ and a
TIFF (LZW) decompressor
are needed to see this picture.
(Glimcher, 2001)

12. McCabe, K., Houser, D., Ryan, L., Smith, V., & Trouard, T. (2001).

13. • “we find that regions of prefrontal cortex
are more active when subjects are playing a
human than when they are playing a
computer”
• “cooperation requires an active convergence
zone that binds joint attention to mutual
gains with sufficient inhibition of immediate
reward gratification to allow cooperative
decisions.”

14. “neuroeconomics”
• First appearance:
– (Warrend D. Tenhouten, 1991) “Into the wild blue yonder: On the
emergence of the ethnoneurologies -- the social science-based
neurologies and the philosophy-based neurologies”. Journal of
Social and Biological Systems, 14(4), 381-408.
– Neuroeconomics is here defined as the study of the neural
substrates, and associated mental phenomena, of productive
and consumptive economic and socioeconomic behavior.
(pp.390)
• First appearance in the paradigm: Glimcher
(2002) announcing his 2003 book
– Glimcher, P. W. (2002). Decisions, decisions, decisions:
Choosing a biological science of choice. Neuron, 36(2),
323-332.

15. Occurences
• Progression: (Source: Pubmed, Scopus and
ScienceDirect, duplicates deleted)
• 2002: 1
• 2003: 2
• 2004: 15
• 2005: 30
• 2006: 28
• 2007: 6 (Jan. 24)
• candidate for the Webster’s Dictionary Word
of the Year for 2006

16. says:
• 476,000 neuroeconomics
• 216,000 neuroethics
• 147,000 neurophilosophy
• 20,400 neuropolitics
• 660 neurosociology
• 12 neurojurisprudence

17. Other results
• “Moral Disgust” in the Ultimatum Game
– Sanfey, A. G., Rilling, J. K., Aronson, J. A.,
Nystrom, L. E., & Cohen, J. D. (2003). The
neural basis of economic decision-making
in the ultimatum game. Science, 300(5626),
1755-1758.
– AI, DLPFC, ACC implied
– Only for humans partner
– Also measured by skin conductance

18. • “Limbic grasshopper” and “prefrontal ant”.
– McClure, S. M., Laibson, D. I., Loewenstein, G., & Cohen, J. D. (2004).
Separate neural systems value immediate and delayed monetary rewards.
Science, 306(5695), 503-507.
• Explanation of preferences (ex: Coke vs. Pepsi)
– McClure, S. M., Li, J., Tomlin, D., Cypert, K. S., Montague, L. M., & Montague, P. R.
(2004). Neural correlates of behavioral preference for culturally familiar drinks.
Neuron, 44(2), 379-387.
• Oxytocin
– Zak, P. J., Kurzban, R., & Matzner, W. T. (2005). Oxytocin is associated with human
trustworthiness. Horm Behav, 48(5), 522-527.
– Kirsch, P., Esslinger, C., Chen, Q., Mier, D., Lis, S., Siddhanti, S., et al. (2005). Oxytocin
modulates neural circuitry for social cognition and fear in humans. J Neurosci, 25(49), 11489-
11493.
– Kosfeld, M., Heinrichs, M., Zak, P. J., Fischbacher, U., & Fehr, E. (2005). Oxytocin increases trust
in humans. Nature, 435(7042), 673-676.
• TD learning and Dopamine
– Tobler, P., Fiorillo, C., & Schultz, W. (2005). Adaptive coding of reward value by
dopamine neurons. Science, 307(5715), 1645.
– Schultz, W. (2001). Reward signaling by dopamine neurons. Neuroscientist, 7(4), 293-
302.
– Bayer, H. M., & Glimcher, P. W. (2005). Midbrain dopamine neurons encode a
quantitative reward prediction error signal. Neuron, 47(1), 129.
• PD and the “warm glow” of cooperation
– Rilling, J., Gutman, D., Zeh, T., Pagnoni, G., Berns, G., & Kilts, C. (2002).
A neural basis for social cooperation. Neuron, 35(2), 395-405.

19. Trust Game
A.
(Y$)
B.
(Y$)
x$ x 3=
x$
3x$
1.
2. A.
(Y-x $)
B.
(Y + 3x$)
 Z$
A.
(Y-x)+Z $)
B.
(Y + 3x) –Z $)
3.

20. Theoretical issues
• “Optimality Optimism”
• “Moral Madness”
• Economic and neuroscientific
perspective (on vs. manys sytem)
• Normativity?

21. Homo (Neuro)Economicus?

22. Evolution?
• Standard View
– Neural rationality or
irrationality
• Adaptive View
– Reverse engineering:
cui bono?

23. “Natural Rationality”
observational
constructive
Normative Descriptive