The Economist's Brain: Tracing Choices with Neuroeconomic Insights | with Juan D. Carrillo
Feb 12, 2024
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Neuroeconomic expert Juan D. Carrillo discusses the blend of economics and neuroscience in understanding decision making. Topics include multi-task decisions, self-control, impulsivity, resource allocation in the brain, neuroscience of food decisions, cues in decision making, and testable predictions in neuroeconomic theory.
Neuroeconomic theory blends economics and neuroscience to understand biological basis of decision-making.
Resource allocation in the brain involves prioritizing tasks based on system demands and needs.
Deep dives
Combining Economics and Neuroscience to Understand Decision-Making
Juan de Carrillo, a professor of economics at the University of Southern California, discusses how the combination of economics and neuroscience, known as neuroeconomic theory, can provide new insights into the biological basis of decision-making. This interdisciplinary field aims to understand bounded rationality by integrating knowledge from economics and neuroscience. Rather than relying solely on behavioral observations, neuroeconomic theory uses principles from neuroscience to build models that explain decision-making processes. By studying resource allocation in the brain and self-control mechanisms, researchers can understand how the brain optimally allocates resources and how cues and environmental factors impact decision-making.
Optimal Resource Allocation in the Brain
One of the applications of neuroeconomic theory is exploring resource allocation in the brain. Juan de Carrillo's research examines how the brain optimally allocates resources for multitask decision-making. Using evidence from neuroscience, it is shown that different systems in the brain require resources, such as oxygen and glucose, to perform various tasks. The central executive system, which allocates these resources, uses a mechanism called the resource cap priority mechanism. This mechanism determines the allocation of resources based on the demands and needs of the different systems. By understanding this resource allocation process, researchers can gain insights into optimal decision-making strategies and the role of resource limitations in the brain.
The Role of Cues and Expectations in Self-Control Mechanisms
Another area of study within neuroeconomic theory is self-control mechanisms, particularly in the context of making choices related to consuming unhealthy food. Based on neuroscience evidence, it is observed that the brain differentiates between high-order attributes (e.g., healthiness) and low-order attributes (e.g., tastiness) of goods. The transmission of information between these brain systems depends on the health realization and the distribution from which the health realizations are drawn. This means that cues and environmental factors can influence the decision-making process. By incorporating economic theory and experimental findings from neuroscience, researchers can understand how individuals make self-control decisions and how expectations and contextual cues play a role in determining their choices.
In this episode, we explore together with our guest Juan D. Carrillo the confluence of economics and neuroscience in understanding human decision-making processes. We delve into how the combination of these two disciplines can illuminate the biological basis of decision making, with a particular focus on complex scenarios like multi-task decision making, self-control, and impulsivity. Juan shares insights from his papers, discussing the innovative approach of neuroeconomic theory and its real-world applications.
Juan D. Carrillo is a Professor of Economics at the University of Southern California and a Research Fellow in the Industrial Organization and Public Policy programs at the Center for Economic Policy Research (CEPR). His research spans Neuroeconomic Theory and Experimental Economics, blending insights from neuroscience and economics to understand decision-making processes. Additionally, Juan co-directs the Los Angeles Behavioral Economics Laboratory (LABEL), focusing on experimental research in economic decision-making and strategic interactions.
You can find out more about his research on his homepage and read the papers that are discussed in this episode here and here.
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