Psychology , and Economic Behavior : The Emerging Field of Neuroeconomics

The history of the study of judgment and decision making has been marked by an iterative tension between what are known as prescriptive and descriptive advances. Prescriptive theories, which typically have their roots in economics, seek to define efficient or optimal decision making. Descriptive empirical advances, with roots typically in psychology, then invariably suggest that these prescriptive theories do not accurately describe human behavior. The neoclassical revolution in economics during the first half of the twentieth century and the period that followed it were no exception to this general paradigm. Working from the theoretically powerful assumption that all of human behavior could be described as a rational effort to maximize a theoretical quantity known as utility, the neoclassical theorists largely succeeded in developing a coherent basic mathematical framework for understanding what people should choose. They hypothesized that there had to be some sense in which humans could be described as logically consistent, and that given this hypothesis all of the powerful tools of deductive logical mathematics could be brought to bear on the study of human decision making. This conclusion was followed, however, by a series of descriptive insights that indicated that the initial round of neoclassic theories were not consistent with human choice behavior. This meant either that humans could not be described as logically consistent in any sense, that the specific models developed during the neoclassical revolution were flawed, or both. The social result of this set of observations was a growing divergence between economics and psychology. In psychological circles the conviction grew that a truly logical mathematical framework for the study of decision making was not possible, while in economic circles the search for such a framework continued unabated. One recent trend in the study of decision making may, however, reconcile this tension between the now very divergent psychological and economic approaches: a growing interest in the physical mechanisms by which human decisions are made within the human brain. Neuroeconomic scholars operating at the interface of the economic, psychological, and neurobiological domains argue that a study of the brain architecture for human decision making will reveal the actual mathematical computations that the brain performs during economic behavior. If this is true, then neurobiological studies that seek to bridge Neuroscience, Psychology, and Economic Behavior: The Emerging Field of Neuroeconomics