Can Neural Data Improve Economics?

You may be interested in reading Eric Maskin’s recent article in Science entitled “Can Neural Data Improve Economics?”. Maskin discusses a recent study (also in Science) by Delgado et al. who argue that “Current economic theories suggest overbidding may result from either ‘joy of winning’ or risk aversion. [...] we find that another factor, namely loss contemplation in a social context, may mediate overbidding in auctions.” Maskin thinks that Delgado et al.’s hypothesis is not clear. He concludes: “Delgado et al.’s discovery [...] is an intriguing neurophysiological finding, although it is not so clear that it has yet led to a better economic model of buyers’ behavior.”

If you are interested you may read the articles by clicking on the “Online” links below (membership required).

• Delgado, Mauricio R., Andrew Schotter, Erkut Y. Ozbay, Elizabeth A. Phelps (2008) “Understanding Overbidding: Using the Neural Circuitry of Reward to Design Economic Auctions”, Science 26.9.08: Vol. 321. no. 5897, pp. 1849 – 1852. [Online]
• Maskin, Eric (2008) “Can Neural Data Improve Economics?”, Science 26.9.08: Vol. 321. no. 5897, pp. 1788 – 1789. [Online]

And do not forget, Neuroeconomics (Hype or Hope) conference is approaching!